Talking about the growth of the ruble now risky

The Fed's revision of its inflation control strategy caused an influx of capital into emerging market assets. Exchange rate of the ruble to the dollar has made a new high and is slowly recovering from the loss against the euro. In contrast to August, September is historically considered a good month for the ruble: a greater seasonal growth was recorded only in March.

Has the ruble weakening ended and now it will strengthen? What is the growth of the Russian currency possible? Alexander Kuptsikevich, analyst at FxPro, answered Fortrader magazine's question.

- Betting on ruble growth at the end of the year is a very risky business. Capital flows often work against the Russian currency, and it is only in January that the ruble finds support in the form of an extremely positive balance of payments. However, this factor is by no means the only important factor for the ruble in recent days.

Let's start in reverse order: from longer-term to shorter-term trends. Global markets are feeding on cheap liquidity, and the Fed's recent strategy change has laid the groundwork for maintaining low interest rates longer. This could have been very bad news for the dollar if the Fed's strategy had not been copied by many others. The ECB is expected to revise its strategy very soon. It is likely that we will see something similar. Moreover, the ECB itself is already worried about a stronger euro, which hints at a softer tone for the foreseeable future than market participants had previously laid.

In summary, this is positive news for financial markets, as investors will be even more energetic to find ways to get real returns, pushing up stock and commodity prices. This promises to be a trend for the next few yearsbut it is unlikely to be a one-way street. There are likely to be slumps and jolts along the way.

Worst-case scenario for the Russian currency

More locally crude oil market may fall victim to inflated expectations. The rebound in stock prices makes us expect similar dynamics from the real economy as well as from commodities. But it's not that simple. Demand has not fully recovered. The first, easiest part of the recovery is coming to an end. Next, the recovery is unlikely to be as brisk, approaching rates just above trend.

If so, oil will have to endure several corrections on weak data, but it is hardly worth questioning the overall upward trend.

Politics is the most unpredictable thing, as it depends a lot on a few people. There is an election coming up in the U.S., which makes all politics in the country shoutier and sharper, and it could be all the way to November, because right up until the end there may be no clear leader in the race.

This promises to make the end of the year very nervous for the Russian currency, with a possible exit to 80 per dollar in the worst case. Looking longer term and without extreme political scenarios, global macroeconomic factors are now on the side of a long, albeit cautious, recovery of the Russian currency.