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Russian Ruble Soars Over 5% (Swings Most Since 1998) On Intervention, Rate-Hike Rumors
Having made new record lows for 7 days in a row, various technical triggers, short squeezes, and rumors of Central Bank intervention prompted the Russian Ruble to rally over 5% - the biggest swing since 1998 as chatter of a very aggressive (greater than 50bp) rate-hike at tomorrow's meeting.
Massive shortr squeeze
and intraday the move is immense!
Commerzbank suggests intervention:
...looks like either a substantial one-off central bank FX intervention, or indirect intervention to the local banking community, Simon Quijano-Evans, head of EM Research at Commerzbank
If RUB recovery is not due to any geopolitical progress, a strong message in defense of the RUB is needed in tmrw’s CBR meeting: Quijano-Evans
This would include a rate hike of at least 200bps, and/or one-off FX interventions, and dropping the corridor policy
UBS' EM desk suggest 3 drivers:
a) hope of rapproachment between Ukraine and Russia
b) risk that central bank hikes rates very aggressively tomorrow
c) expectations that oil price isn’t going much lower from here; small tactical rally is possible near term
And technical drivers:
"Ruble may be poised to appreciate against the U.S. dollar in coming weeks after the slow-stochastics study, which measure the velocity of a security’s price movement, exhibits a bullish crossover near the oversold threshold,” says Bloomberg Technical Analyst Sejul Gokal. “A similar crossover in March this year, led to a 6.2% appreciation of the the Russian ruble versus the greenback, over a period of 13-weeks.”
As Goldman adds,
The sharp decline in the Ruble and US$28bn in reserve losses month-to-date are likely to be of significant concern to the CBR, given related risks to financial stability as well as to inflation expectations, and we think this is likely to cause the CBR to enact decisive changes to its FX policy.
While the recent uptick in inflation expectations increases the risk of a larger rate hike and this is now being priced by the market, we continue to expect the CBR to hike its policy rate by 50bp at its board meeting on Friday morning (October 31).
In our view, the rationale for a rate hike of this magnitude would be grounded in the recent deterioration in inflation dynamics, and we think a larger rate hike would not be the most cost-effective tool to stem the recent weakening of the Ruble. Given the options available, we expect the Bank to abolish its current intervention rule and conduct a discretionary currency intervention of a magnitude sufficient to stabilize the FX market and signal to the market that the CBR views the recent FX volatility as a significant risk to its mandate.
Such a policy choice would likely be more effective and significantly less costly than a large policy rate hike.
Timing the change to the FX policy is difficult. Nonetheless, we think that a change to FX policy prior to Friday’s rate decision would give the CBR additional policy optionality with respect to its interest rate decision. Our expectations for the CBR’s decision continue to suggest that OFZs and Russian sovereign credit remain attractive.
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i don't believe a shit word from them - exchange rate so fucking rigged
You'll need Ruble to buy Russian gas and oil soon.
oh, rumours of Russian national bank intervention. btw when does Russia appoint a really good looking babe to be their NB spokewoman or chairwoman? I'd like to see one of their scientists in this role, perhaps a nuclear engineer with a doctor in applied propaganda. this is the way you fight a currency and financial war
"The sharp decline in the Ruble and US$28bn in reserve losses month-to-date". behold, we are starting to read about... FX reserves. of course, denominated in USD
when does Russia appoint a really good looking babe to be their NB spokewoman-
->when we will nationalise central bank
I hope we will have referendum at the end of the summer
oh. my. goodness. nationalizing the Central Bank of the Russian Federation? this completely flew under my radar, thanks
"what a socialist thing to do", I already hear in the "MSM". Except that of course this is what Brits did with the Bank of England, 1946, if I remember correctly
well, my wishes for a cute central banker might truly come true
It's stupid when Central Bank of the Russian Federation does not obey to Russia, and only obey to IMF.
Hard times ahead, but freedom from occupation always cost high.
choice to make for russia:
1 accept only own money for the goods exported, or gold, silver, wheat, oil, whatever with inherent value.
2 sell the bonds, exchange usd for gold. default on the debt owed by the countries that sanction and work against them.
3 export import only with countries that are interested in good relations.
4 suffer and be free.
or if they need to accept thet some animals are more equal than the others and:
1 store savings in usd
2 work for usd
2 suffer and be enslaved
First thing to do - to take control of the our financial system -how to trade - is a second thing.
or if they need to accept thet some animals are more equal than the others and live like all world including USA, EU, Japan, etc:
1 store savings in usd
2 work for usd
2 suffer and be enslaved
Yes, positive if it doesn't go too far. Like forcing all international payments to go through one government sanctioned institution at government mandated exchange rates + bribes.
johny2,
i think russia and china, possibly india, ought to have a coin gold backed. ie., a rouble standard gold backed intended for trade and citizens wanting to secure their wealth...and other currency floating freely. i believe this gold backed rouble, or yuan would generate a great deal of foreign interest as well as those at home wanting to secure some of their personal fortune.
Why pickup pennies in front of a slow moving steamroller, when you pickup pennies from a train track where two very large faster moving trains are on a collision course?
Every bankster for himself from here on out! Watch out for the nail guns and the snow plows!
hoping to see a banzai image of a horse named kerry hurtling through space as per drudge article.
No wonder Putin wants to de-dollarize.
wanting is one thing. finding something to sell against Rubles when the Ruble is under speculative attack at the dollar front... something completely different
let's see how far they go with rumours. if they succeed, too, then rumours might become the new global reserve currency. perhaps they already are, thanks to algos and brain-dead traders
"finding something to sell against Rubles"
How about ...your avatar ?
that's the problem, isn't it? actually three of them:
first, the major FX "cross" for the Ruble is USDRUB, where you also find the greater liquidity to finance a trade on the other side of the RUB
second, FX reserves... where of course EUR makes a way smaller part of the Russian "ammo magazine" (note how Turkey is shifting EUR to USD for the same reason)
third, oil is still mainly priced in USD, and it's the single most important export of Russia
behold the power of King Dollar. behold the power of big currencies, and how fast small and medium currencies can be trashed by "unfriendly markets". Like a terrier with a rat
in that case we know what we have to do : have Norway join the EU and eurozone...
and BREAK the US-Saudi pact.
I always liked Putin more than Obola and horse face Kerry.
I presume you account for... pectorals
No, he accounts for brains. Obama has shit...
Russian Ruble Soars Over 5% On Intervention, Rate-Hike Rumors
Russians have also learnt the art of Jawboning.
And if they actually do raise rates, that's going to leave a lot of western banksters jawbones gasping like fish out of water.
Russian financial government and russian people are different things...
Same same but different, you mean?
They are all playing the same game, just different languages.
Yeap, it's same, banksters same.
Ah, theres the rub.
Unless the ECB steps in here with QE oil will hit $75 easy. BoRUS is loaning billions of dollars all over the place. At this rate, Santa's gift to Putin will completely depleted FX reserves.
Putin needs to swallow his pride and cut a deal or a cooler head is going to replace him at the helm.
So far, pmi state around 50, so no change since last month.
So where is this boom you are talking about if there is no change?
JM,
You say "Putin needs to swallow his pride and cut a deal or a cooler head is going to replace him at the helm."
Hard to find a cooler head that V. V. Putin's. He has been exceedinlgy moderate in the face of outrageous provocations, has avoided Washington's efforts to lure Russia into a full-blown invasion of Ukraine, and has won his people's loyalty by sticking to his promise not to allow Russians to be "cannon fodder for the New World Order."
You say Moscow should cut a deal. But Washington will accept no deals short of Russia's surrender. Russia must either resist, or resign herself to joining the US's globe-girdling hive of compliant states. Our ruling elite have made it clear to Russia: comply or be treated as an adversary. You have no other option.
I think it unlikely that Russia will seek a change in leadership as long as this rubbish is going on.
Ridiculous. Russia is outmatched in every respect. He is a fool running on dwindling FX reserves to bail everyone out and he can't stop the currency collapse at the same time. How do you think the Russian economy is going to take a rate increase?
Tell your hero to stop prolonging the agony and do the necessary and right thing. Good leaders know how and when to swallow their pride and cut a deal. This is what makes them leaders, be it CEOs or dictators or whatever.
Pride won't last long once BoRUS FX reserves run dry. Count on that.
The EU will get their Middle East pipeline.
Stop denying reality, cheerleaders.
Russia could be a bigger version of Canada, if they ever get it together.
Happy peaceful and rich.... too easy I guess.
JM,
You don't get it. You don't understand our inscrutable leaders in Washington. You keep saying Russia should cut a deal. But no deal is on offer. Surrender is the only option. Washington does not negotiate, it dictates. Condoleeza Rice: "We prefer predonderances of power that favor our values over balances of power that do not."
Well, you can forget the bit about values (what values -- endless, optional, financially ruinous wars of aggression with no clear outcome, sustained assault on the value of the natiional currency, homosexual marriage and gay adoption of children?). We saw US values on dislplay in Ukraine when we otherthrew the democratically elected government there, and we see them now in our support for a quasi-fascist regime that uses cluster munitions against its own population.
Condi's essential point is -- we want a preponderance of power so we can dictate to our satelites (we have no allies) and those we would dragoon into our hive (like Russia); we do not want a balance of power because that means you have to talk and cut deals and give and take.
V. V. Putin undertstands this. I will spare you a recitation of his dealings with Washington over the years, but consider the "negotiations" Washington demanded over Syria. We said: "Let's talk, but one this is clear -- Assad must go." Putin replied in effect -- "We do not particpate in 'negotiations' with pre-determined outcomes." But Washington knows no other kind.
So ruble went up in value?
Hmm. Maybe not good for local producers as there is a massive boom in agriculture production and industrial goods.
Sone are pissed that their dutch cheese, ipods and wannabe kardashians vacation spot in greece.
change of ruble value = change of all assets in rubles - it's mean change of all russian against western and it's 100 times large than all this small stuff
Hey Mikhail. Check the independent PMI numbers before you spew.
Pmi is showing about 50, no difference of last month. Producers on the ground are seeing a difference though: http://m.rbth.com/business/2014/10/08/russia_comes_to_terms_with_sanctio...
Agriculture development in Russia is where I never seen before.
50 means no growth, dude. So much for your booming industry.
http://sdelanounas.ru/blogs/?id=120 50 indicates no change, look at the graph differences.
Before getting angry, better look harder.
Then there is this:
http://sdelanounas.ru/blogs/?id=120
For those interested: http://sdelanounas.ru/blogs/?search=??????????
For import substitution: http://sdelanounas.ru/blogs/?search=????????????????
There is no boom if there is no change. How hard is that to get? 50 is a benchmark that indicates no expansion.
Nobody is angry, just trying to cut through the crap. Also, look at HSBC's number. Russia has too much (understandable) incentive to cook the books.
I was looking at trading economics.
I should specify that local producers are doing very well, foreign manufacturers are not doing so well. There is a boom in local production of local goods I should have been specific. I provided english link that mentions it. Rbth.com. Russian links are no good it seems as all cyrilic turns to ?.
Last two months pmi was up. This month, it was 50 so it shows it didnt go up beyond what was last month.
Also, if you can read Russian, there is a fair amount of info that shows new agriculture businesses being set up and new facilities for import substitution. All in the link I provided sdelanounas. So it may be sometime till they see an increase as production is just starting.
http://www.tradingeconomics.com/russia/manufacturing-pmi
A reading above 50 indicates an expansion of the manufacturing sector compared to the previous month; below 50 represents a contraction; while 50 indicates no change.
Be aware that Russian industry is largely mining and energy. Local goods are not a big contributor to economic activity. Also, purchasing power is reduced as a direct result of the ruble's demise. This isn't adding up to a positive thesis, but it is true.
I'm hoping, given that I own Sberbank shares, that Putin will either shape up or go.
Don't read Russian. Hear it is the earthiest of all languages. And girls from Odessa are the most feminine of all women.
I come from the Ukraine, some of my family moved east to Russia for a better life. In west, you dont find a lot of Russian end goods, you do in many other countries.
With ruble declined, there has been an upsurge of sales of products to former soviet CIS, and poorer countries of Russian goods. While in west, we mostly take their raw materials. Biggest contributer to Russian gdp is domestic consumption. While imported goods from west now cost a lot more, domestic sellers have increased production, new facilities being made, and new imports from other countries. Ruble going down has seen an upsurge of Russian goods selling to poorer countries but large producers from abroad producing in Russia is now seeing loss. China now has invested ridiculous amounts in building manufacturing in Russia, latest is great wall plant.
My family back east is doing well now since they are in agriculture and seeing a higher demand for local made goods.
I careful with anecdotal info that doesn't flow through in the stats, man.
I am basing my experiences. I dont necessarily trust hsbc and their findings, especially if rosstats says something else. Evidence shows, if you can read Russian on sdelanounas.ru, there is growing demand and growth of new enterprises. All with photos and videos. Statistics can be driven one way or another, depending how they perceive things. Local production is up, localized production of foreign goods is down. Could be these two combinations which are factored. PMI whoch I mentioned shows there isnt a change from previous months growth. To me, that is a lot better than a negative.
What ag does your family do?
Where are they?
I have decades ag experience, was offered 50k hectare freepay of rent general Perm area years back..
Had too much going on already for try new challenge.
Still thinking about, though..I think Russia has ideas and ag will keep growth.
Zdrazvute.
You should have taken it while that deal is good. I would have. Right now, agriculture is big (besides dacha garden) and no stupid laws about keeping chickens in towns. They are from rostov and are small farmers. Mostly meat and some fruite. They sell to local shops. Big money for them lately.
Apparently big companies are taking over and soon small time farmers will either be gone or resort to simple village/town trade as big companies have lots of money and impressive facilities. You own 50K acres, you could have rented it out. In perm? Good area for cattle. If still available, go for it. You may not be lucky in future. Goat meat also sells well.
Dairy is also good business. Cheese. Cattle not so expensive, but new cattle breed complex is in tatarstan, so may cost a bit to transport.
I wonder if Soro has a hand in this FX monkey business.
With a declining population, steady production actually equates to growth per capita.
Umm, Russia faced a population growth. Now at 146M compared to 144M a couple years ago.
Russian Federation population is growing several years now.
http://en.itar-tass.com/economy/757418
It seems the future for Russia is domestic development/consumption. While they are not gonna change the tax laws for enterprises, there is a growing demand for localized production. Right now import substitution is the craze, but now are looking at total localization. Some specialists are saying this is bad and some are saying its good.
http://russia-insider.com/en/politics_business/2014/10/30/04-01-32pm/kre...
Seems I am correct.
Those who understand russian.
http://youtu.be/HsjL2GwKq0M
In short:
1.) Russian "humatarian" truck loads ammo, soldiers, etc.
2.) at least 2000 ruskie soldiers already dead from last "humatarian" cargo
3.) Dead bodies are being hidden, lot of of secrecy
4.) Russian soldiers fighting together with what they call "psychopath" with beard - those are volunteers (islamic type)
5.) Russians supply working good, unloads supply fast and for exampe 7 days and 7 nights bombed Ukranians without a stop - like robots
6.) When they returned to Russia with "humatarian" truck (Kamaz) full with dead bodies and those who alive - no Russian cop stopped them - all turned around (laughed)
7.) Still everyone shocked about amount of Cargo 200 (for those who doesn't understand than term Gruz 200 http://en.wikipedia.org/wiki/Cargo_200_%28code_name%29 )
Conspiracy stories are not good for you or anyone.
Men (russian speaking ukranians) in Donbass declare war to Russian "seperatists":
http://youtu.be/VSWcRwQ0q3w
bored...
https://translate.google.fi/translate?sl=fi&tl=en&js=y&prev=_t&hl=fi&ie=... That's what you are