© Reuters. Russia’s battered ruble could be making a comeback
(Bloomberg) – A rebound may be in sight after the three straight months of losses.
The world’s largest exporter of currency is one of the worst performers in new markets during the period, even when oil rose again by almost 30%, prompting analysts to Citigroup Inc. (NYSE :). and Sova Capital to suggest that the ruble is fundamentally undervalued.
The weakness of the season has been exacerbated by geopolitical risks that have raised concerns about fresh sanctions against the Kremlin. If this fear is not realized, the ruble could return to trading around 70 per. Dollar, where it ended May, analysts said. It involves an approx. 6% strengthening from current levels.
The risk premium is largely due to concerns that President Vladimir Putin will intervene in neighboring Belarus, where mass demonstrations are calling for the end of President Alexander Lukashenko’s 26-year rule. The recent poisoning of Russian opposition activist Alexey Navalny has also helped burn bets that the United States and the European Union are striking more sanctions against the Kremlin.
Investors in Russia have good reason to be irritated by the risk of sanctions – they have been caught up in unexpected twists in Putin’s intervention in foreign policy in the past. But James Barrineau, a veteran of new markets money manager at Schroder Investment in New York, claims that the market this time has gone wrong.
He sticks to his investments in ruble bonds with the logic that an explicit Russian intervention in Belarus is unlikely, while sanctions are not high on the agenda in the US when it enters the election period.
“Whatever Russian influence is exercised in Belarus is likely to be exercised behind the scenes and is unlikely to lead the story to the absence of a widespread unrest that threatens to spill out of the country,” Barrineau said.
Finisterre Capital’s Damien Buchet said he was looking for the right time to buy the currency. “The ruble was cheap at the end of July, and now it’s even cheaper.”
“When it comes to geopolitics, these headlines about Putin are helping Belarus – I think that’s the least he could do for a friendly country in an economic union with Russia. I am not reading this as Russia overcomes and confronts the West. ”
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