Russian Currency Plummets to Record Low

ufx.com - russian currencyThe Russian Ruble dropped to a low way below the central bank’s projection. The government is now thinking of capital controls due to the worst performance among the world’s emerging markets.

The ruble for the time being slipped below 44.40 following the announcement of officials which hinted policy makers may implement provisional restrictions in case net outflows go up considerably.

It cut down declines after the Russian Central Bank said it is not considering limits related to cross-border capital changes. Yield on 10-year bonds increased six basis points (9.42 percent), bringing the increase for one quarter to 102 basis points.

The imposition of controls on money flow was discarded eight years ago. However, it now puts in jeopardy a selloff in assets which gained stimulus as the US and EU expanded sanctions against Moscow. The ruble plunged 14 percent against the US dollar during the quarter which broke record lows during the last three days.

The central bank of Russia is looking at all potential scenarios regarding the implementation of said capital controls.

Yet, a final decision has not been reached. There is no specific timeline while measures are said to be preventive once net outflows increase radically.

The ruble waned 0.1 percent to 44.2573 versus all other major currencies. It lost 0.4 percent to the dollar (39.5800) which was 14 percent and the worst among 24 budding economies.

Meanwhile, government 10-year bonds finished its best performance this month since May due to the ceasefire. The finance ministry of Russia announced it will hold another bond auction offering 15 billion rubles or $379 million in local currency securities. This is due in January of 2028.

EUR/USD Pair Movement

An upside yesterday on the Forex pair is presenting testing a downtrend angle from top1.3432 top with an angle at 1.2712. A sign of strength is being able to cross over to the bullish side of this angle. A possible uprush into the bottom rate of April 4 at 1.2744 can establish higher support over this angle. The EUR/USD tandem is trading distinctly below at the middle session following convincingly eliminating the bottom at 1.2660 for November 13, 2012.

Expect a monthly chart target at 1.2562 as its next downside target as this figure could start an even further decline down 1.2302 during the coming near-term.

On the positive side, the 1.2660 as old bottom could become a new resistance together with a long-term downward trending angle at 1.2672.

Meanwhile, the main trend is down on the hourly chart for the trend turned down after 1.2684 was eliminated earlier in the session. A couple of hours later, acceleration began.

Forming between 1.2702 and 1.2570 is an intraday short-term range. Should any retracement start forming midst 1.2702 and 1.2570, watch out for a1.2610 test; but 1.2636 to 1.2652 is still the best target.

There will be no support and resistance today, but there will be a momentum. So watch for volatile swings coming from either direction.

Gold Update

ufx.com - gold pricesAfter President Obama commented on the strength of ISIS and stressed that traders can be a global coalition to be used to assault the terrorist organization, the precious metal climbed over to $8.00 today trading at 1223.70.

Data expected later today may present that the personal spending of the U.S. expanded in August following last week’s data showing how much the largest economy of the world has flourished the during  the second quarter of 2011. About 70% of gross domestic product accounted for consumer spending.

On Sept. 26, holdings in the SPDR Gold Trust that served as the largest gold-backed exchange-traded product were contracted from 0.1% to 772.25 metric tons, since December 2008.

India’s demand for gold is reported as growing substantially due to the coming season for festivals and weddings now fast approaching. There are added reports that substantial amount of bullion has been purchased purchases by the ‘super rich’ as security against any substantial downturn of supply in the stock market and the  continuing conflict in the Middle-East, North Africa and Ukraine. So the current weakness in the price of gold is not justified.  This implies that the main depressor of the recent gold price is the strength of the U.S. dollar adversely impacting the lower dollar price of gold; however, the decline is not considered as severed compared with other currencies.

 

Central Bank Intervention Draws Near as Ruble Goes on a Record Low

The ruble is now one of the world’s worst performing currency for the 3rd quarter of 2014.   Russia’s Central Bank has already announced that it would make steps to remedy the situation.

The currency went down to .8% to 44.2450 against the Central Bank’s reserve of euros and dollars as past 8pm last night.  This rate is now with the .4% of the set threshold that would allow the Central Bank to start purchasing rubles as part of its mandated guidelines.

Russian policy makers interfered last May which brought up to $40 billion the value the country sold this year to stop the migration from local assets that showed so much growth after President Vladimir Putin occupied the Crimea Region in Ukraine.

Companies in Russia will feel dollar-funding stress as well when the $35 billion of Russian debt matures by the end of the year.  The EU and USA’s sanctions due to the Ukraine conflict will be an additional factor to the downfall of the economy.