(Bloomberg) — the Ruble, which showed the worst dynamics among the currencies of developing countries last month, over the last 10 years only twice has appreciated against the dollar by the end of August.
In addition to seasonal factors Mosoblgaz this year is losing appeal amid plans of the Ministry of Finance, the approaching end of the easing cycle the Bank of Russia and strengthening the sanctions rhetoric.
What are waiting for market participants:
ROSBANK: Unstable month
- “Russian financial assets are included in the August – historically volatile month – in a very uncomfortable position, – said the head of research Department of JSC ROSBANK Yuri Tulinov. – Even more news flow before the approaching presidential elections in the US will add uncertainty”
- “As of now, the most likely scenario in August – a temporary transfer of the ruble in the area below 75 to the dollar and further upward pressure on OFZ curve, primarily on the area for 5-10 years”
- “The longest paper already yield 170 basis points premium over the key rate of the Central Bank and look attractive for the price. But who will buy them?”
Arikapital: the Deterioration
- “We expect the weakening of the ruble to 77-80 per dollar by the end of the year, but in the case of a downturn in global markets and declining oil prices, can see this level in August,” wrote portfolio Manager UK “Arikapital” Alexey Tretyakov
- “Fear of sanctions may cause the sale of foreign OFZ holders, what will be particularly sensitive to long-term bonds. I think that it is possible to increase of yield on 10-year OFZ with a 5.9% per annum to 6.5%. In the case of stronger revenue growth, I think that the market’s support will come domestic institutional investors and banks”
Sberbank UA: Low rates awaken the appetite
- “Seasonal factors have traditionally played against the ruble: it’s the season of dividend payments, the opening of borders and cancellation of restrictive measures can lead to import growth, – said the portfolio Manager of JSC “Sberbank Asset Management” Dmitry Postolenko in the review, passed through the press service. As a result, the demand for foreign currency will exceed supply”
- “In these circumstances, first and foremost, we like corporate bonds with wide spreads to the OFZ. At low nominal rates, the local participants are all more willing to assume credit risk. In the end, the end of the year, the spreads of corporate securities to OFZ could fall”
- “After the recent weakening of emerging markets currencies carry trade operations can once again become popular at the first sign of a reversal of the ruble against the dollar. In this regard, the range of profitability on long OFZ at 6.30-6.50% per annum for us are interesting to buy”
ITI Capital: a Rollback will be replaced by ‘honeymoon‘
- “August can be divided into two parts: the first will be volatile as at the local level, playing against the ruble is the lack of sales for exporters and the increased demand for currency in the midst of a dividend period, said investment strategist ITI Capital Iskander Lutsky. – And global – sanctions talk that much concerned about the international funds on expectations of a victory of the Democrats in the USA”
- “The negative dynamics will continue till the mid of the month when the end of the dividend season, while the ruble is unlikely to fall below 75 per dollar. Then the possible reversal of the situation, as likely positive news about the pandemic, for the development of vaccines”
- “It is more likely that by the end of August, the ruble strengthened to 69-70 for a dollar. At the end of August – beginning of September for Russian assets is possible “honeymoon”, and in October, a new negative milestone in the run-up to the US elections and the possible victory of Biden”
1.618 Capital: Russia is to sell
- “We expect a sharp weakening of the ruble in the near future”, – said the partner of 1.618 Capital AG Valentin Egorov involved in the management of assets for $300 million. Short – term goal of 75-80 ruble/$, the medium-term goal is well over $ 100″
- The main causes of collapse: the huge budget deficit in connection with the “closing of the economy during the epidemic; the problems with dollar liquidity due to the collapse in export revenue and a rise in the rate of withdrawal of capital from the country”
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