Ruble Gyrates as Panic Spreads
Russia isn’t getting any better.
Analysts say capital controls are moving into sharper focus. The chief Europe economist at the Institute of International Finance says Russia’s central bank has ‘just hours or days’ to get its currency crisis under control. Global banks are curtailing the flow of cash to Russian entities. Apple’s halted sales in the country, saying the fluctuations in the ruble makes it too difficult to price products.
All the while the ruble continues its sharpest selloff since the 1998 financial crisis. It rose as markets opened, but remained volatile.
Here’s what investors and analysts are saying now:
Steven Barrow, strategist at Standard Bank: “What has become a lot scarier in the last few days is the possibility that economically unrelated countries could see similar freefalling markets as risk aversion soars. There is also the possibility of liquidity shortages which could occur as funding access diminishes for borrowers or because the depth of some asset markets proves to be far shallower than investors expect.”
Luis Saenz, trader at BCS Group: “The central bank is unwilling to support the ruble through interventions or via introduction of administrative controls which basically means that the currency is poised to take the major hit from the oil plunge. With Brent trading $55-60 a barrel we see current fair value for the ruble at 60 against the dollar and a market target of 63 to 65.”
Anthony Peters, strategist at SwissInvest: “The situation in Russia might be critical but the lack of liquidity makes it nigh on impossible to relate the economic and political realities to where markets are supposedly valuing both the ruble and Russian assets. There are plenty of sellers and no buyers. That said, we did see some bold privateers stepping out and taking small punts in some ruble-denominated paper yesterday. If they get it right, they could well have doubled their money within three months. I’m not sure they have.” ...MORE
