Hedge funds bet on Russian Rouble’s crash.
Russian Rouble was under heavy selling pressure after pessimistic comments by country’s Minister of Economic Development Maksim Oreshkin last Wednesday. Large hedge-funds closed long positions from September and the number of short futures contracts exceeded highest historic level in Chicago Mercantile Exchange. The exchange rate fell to 66 Russian Roubles per one US dollar after hovering the range of 65/66 roubles in February, as currency traders sold off options and futures contracts for the currency. Two large hedge-funds joined the group of bears, while the total number of funds selling the currency was increased to 7. Hedge-funds lost the first wave of rouble’s devaluation last April when the currency was going sharply down but the second attempt was much more successful as many traders shorted the rouble in summer last year when the exchange rate was in the range of 62/66, taking profits at the price of 70.
September was the turning point for the currency as traders reversed and went long. But the current shift tells that investors lost faith in Russian assets. The beginning of the year is traditionally a good time for the currency, looking at the speculative flows, the lack of import payments and transfers from oil sales in Europe during the winter period. The situation will start getting worse in April when the economy will get an additional income of 5 billion dollars as the trade balance positive surplus, while Finance Ministry will seek additional liquidity of 2-3 billion dollars on the back of interventions directed to buy foreign currencies.
The Rouble would be saved by safety bag accumulated by banks for a while with a total volume of 7.6 billion dollars placed in foreign banks. However, if the capital outflow would remain at the same level as in the past year - 67 billion dollars - then that resource will be exhausted quickly and the access to US dollars will be lowered for local companies. The exchange rate might reach a level of 70 roubles per one US dollar.