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MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
EMERGING MARKETS
- RUB stands atop the CEEMEA FX performance board today vs the USD, registering a minor decline vs the USD today. Since last week Tuesday, the currency is +1.16% firmer vs the USD, while its peers TRY & ZAR stand -2.38% & -2.35% weaker.
- This is primarily due to insulation from CBR hikes, high and rising oil prices and relatively low geopolitical risks on the RUB side of the equation. Meanwhile, ZAR's high beta nature coupled with heightened uncertainty in China, pressure on PGM prices and weaker terms of trade has made it a magnet for risk-off conditions.
- Additionally, TRY's monetary policy, geopolitical risks (S-400s) and inflation difficulties have exacerbated underperformance vs the RUB. Policy in both Turkey & SA is now also much looser than in Russia, creating a stark divergence which has been prolonged due to persistently CPI pressures that continually develop above the CBR's forecast.
- On a 6m basis, ZAR/RUB stands -5% lower (-4.55% YTD), while TRY/RUB is -12.29% lower over 6-months (-17-79% YTD). Both ZAR & TRY have somewhat more precarious fiscal/external positions vs RUB and are thus more exposed to rising UST yields across a spectrum of areas.
- On a medium-term basis, ZAR's more appealing fundamental backdrop should likely see it fare better than TRY, however.
- ZAR/RUB is trading around key support at 4.80, with a breakout opening up 4.60 to the downside as the policy divergence becomes more deeply entrenched.
- TRY/RUB continues to find new all-time lows and has breached the June trough at 8.2107, with 8.00-8.50 the next major target zone to the downside.
YTD % Chg ZAR/RUB & TRY/RUB
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
Why MNI
MNI is the leading provider
of intelligence and analysis on the Global Fixed Income, Foreign Exchange and Energy markets. We use an innovative combination of real-time analysis, deep fundamental research and journalism to provide unique and actionable insights for traders and investors. Our "All signal, no noise" approach drives an intelligence service that is succinct and timely, which is highly regarded by our time constrained client base.Our Head Office is in London with offices in Chicago, Washington and Beijing, as well as an on the ground presence in other major financial centres across the world.
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