Major Western banks curtail investments in rubles and recommend clients to bet on further decline of the Russian currency due to the risk of sanctions and capital flight.
The first play against the ruble, advised customers of Bank of America Merryl Lynch. August 3 – 5 days before the beginning of the collapse of the Russian currency on Masuria in the review of the Global “Emerging Markets Weekly: Famines and feasts in EXD” he recommended taking a short position in the ruble against the basket (55% USD and 45% EUR).
Last week, amid a rebound in the dollar by 3.3 ruble and Euro – ruble at 3 to BofA joined other American and European players.
According to Bloomberg, the rates against the ruble makes Morgan Stanley, the largest Swiss Bank UBS has recommended clients to minimize investment in the Russian currency.
Analysts of both banks wrote in the reviews that the risks outweigh the potential income from investments.
The largest US Bank JPMorgan is selling Federal loan bonds, told Bloomberg Diana Amoah – investmanager its departments in asset management.
According to her, the likelihood of sanctions against the state debt of the Russian Federation amounts to 50 percent, and a high proportion of foreigners in the market creates the risk of significant price declines.
According to the Central Bank, from April, non-residents dumped debt securities of the government of the Russian Federation to 370 billion rubles, and index RGBI, track their quotes, slipped to at least March 2017.
“We are all concerned about the geopolitics, said Amoah in an interview with Bloomberg TV on Friday. – Many of the sanctions comes on the eve of the midterm elections. I think there’s a need to send a powerful signal that the United States will not allow interference in its democratic processes.” Hedge funds, trading fusecram on the ruble on the stock exchange in Chicago (leveraged funds), are already net short position for the first time in 2015 their bets on the fall of the Russian currency is 4 times higher than rates strengthen, according to the CFTC.
The presence of foreign speculators can be seen in the swap market, as indicated in the overview of Raiffeisenbank.
Non-residents bring to the market dollars in exchange for rubles which attract through swap operations with Russian banks. Those rubles spent on the purchase of foreign currency on the spot market to sell at a higher rate, describes the schema, the analyst of Raiffeisenbank Denis Poryvai.
“The ruble remain very sensitive to potential new US legislation (sanctions) – noted in the review Morgan Stanley analysts. – We think that political risk will weigh on sentiment and will lead to higher risk Premia at the ruble closer to September.”
U.S. likely to impose sanctions selectively, to avoid “collateral damage” and will not accept the bill completely, says Tilman Kolb, an analyst at UBS. However, the pressure on Russia, most likely, will increase even more in the short term, he warns.
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