The Ruble is headed only one way: down. Putin spent $90billion of the reserves and has what to show for it? Nothing! Just a delay of the inevitable...... He could have bought a boatload of airplanes, iPhones, stock in Apple, etc. and he'd have more to show for it than he does now.
The sanctions due to the whole Ukraine thing hurt, but not nearly as much as the fall in the price in oil. Last month (?) when the ruble was at 44/usd I called my currency trader and asked about shorting the ruble. I could have levered up a few $100,000 and made a killing. But, I thought it was too risky and I guess it still is ....
The ruble won't stop dropping until:
1) All the oligarchs get ALL their USD out of the country.
2) Putin exits the Ukraine. Since he won't do that, this means that the ruble will keep dropping until Putin leaves. And Putin won't leave easily or politely which means social unrest on the horizon before the ruble stops dropping. So, yes, in four years 104/usd is completely on the table.
AND:
3) Price of oil increases. This may be another year or two.
One big red flag for me: Why would a Russian bank offer 7% interest on USD deposits? Banks in the USA don't even charge that much interest on loans in USD. So, what are they doing with the money? ? ? I see a bank with a bad balance sheet and facing bankruptcy on the micro level or else nationalization at the macro level. No other reason to offer such fat interest rates--try and attract capital from abroad. Again--why?
In short, if I were you, I would get ALL my assets out of Russia, except for the ones I can afford to lose.
P.S. Normally I am an optimist. And, I am optimistic, but not about Russia.
Id have to totally disagree.
If oil is your answer, then you should be bailing on the US market as well, and canada, and brazil, and venezuala, because all of them have taken MASSIVE hits because of oil prices. Russia is one of the only markets that can actually survive a massive oil price dive, specifically because the russians can produce it at 4/barrel.
Canada's market is what just got annihilated. Why are we only talking about russia? Look at canada. Canada's dollar just went from 1.25 to ~.8 vs USD. That's a HARDCORE drop.
Canada's primary income IS OIL, while russia has massive amounts of trading partners of all kinds.
Also, with the way trade accounts are headed, the USD will soon no longer be the world reserve currency, and when that happens, the USD will plummet.
Also, trade accounts at 7% is a under valuation assessment. Russia offers treasuries at 10.5-14% to standard market goers. What the 7% means is that Russia values USD less than other currencies.
I do a lot of currency trading, and so do my friends, and we are all betting on the russian ruble to rise in value.
Addressing the currency drop that russia did, yes, they dumped a bunch of currency, US CURRENCY.
They also dumped over 100 BILLION dollars of US Notes and Treasuries as well, and have in the past 4 years dumped another 400 BILLION more.
The russians arent bleeding losses, they are dumping US currency reserves, and the correction is a temporary drop in currency. They lost reserve, its an obvious fact. They also got rid of bad investments, which is in the LONG RUN a waaay better play.
Putin has been exceptionally good at getting Russia out of the dark ages, and making them very financially strong.
As for Oil Prices, OPEC, and several other oil producers, have already said that the Oil prices are absolutely going to go back up, which we all know is a reality. Its only so long before the excess oversupply is consumed, and saudi arabia (the culprit here) stops mass dumping their oil and runs out of reserves. NGLs are assessed to only last until roughly 2028 at best, so they arent even close to ever going to be a replacement to oil, so lets go ahead and shoot that down too while we are at it.
The only reason why the market is even where it is now is because ISIS is dumping Syrian Oil on the market for less than 30/barrel to fund their organization, and its causing the saudi's to sell theirs for cheaper, which had a domino effect on the market.
Once the mess that the US, (yes that's right, the US caused, armed, funded, formed ISIS, and caused their rise of power), blows over, the markets will return to normal. Might even happen before then.
Also trade sanctions on Russia by the EU will effectively end soon, as the EU (big Surprise) needs RUSSIAN OIL to make it through the winter. They need their gas too. Who knew? Oo thats, russia knew.
They also knew that the food embargo would fail as well, as Russia has already announced they have moved the majority of their food trade to china, with the remaining amount going to brazil in the very near future (Mid term next year). Once that happens, the 2 billion dollar embargo by the EU will have been neutralized, and the only losses were short term, and now the EU has yet another major food shortage to contend with. (By the way, don't know if you've been watching UK news recently, but people are freezing to death there and starving. Just an FYI)
Another thing of great note is that the only major impact that the US currently has left remaining on Russia is the banking sanctions, which with mastercard, visa, and the new japanese transaction system going in, will be effectively neutralized by if Im not mistaken no later than Q2 of next year.
With the dawn of that system, the overall effectiveness of the sanctions by both the EU and the US will fail, and will be inert.
Even worse still, the US knows this, and is sending in heavy weaponry to the Ukraine (Tanks, fuelers, haulers, and armor towing vehicles seen near latvia recently) so that a physical engagement can be prepared for if nothing else.
The EU needed the Ukraine to boost the Euro, but the Euro is going to fail, and it was a bad deal for the Ukraine, and they knew it. The clock is ticking on the Euro anyways. Germany is up to its ears getting sick of dealing with hand out after hand out, theyve already announced that (They also recently opened a major trading accoutns system at their central bank for trading in YUAN).
Greece will most likely be the first one to leave the Euro though, due to its horrible austerity measures, and the obvious rise and impending election of the Syriza party, who will no doubt be elected by landslide popular vote. GG for the euro once that happens. Germany has already tried to leave the EU several times, and once someone else leaves first, the curtain will faill on the Euro, and it will collapse as everyone runs for the door.
The whole damn debacle is embarrassing honestly, between the US, the Russians, the Chinese, the BRIC, and the UK, Ukraine, and all the markets caught in the middle.
Also, just an fyi, a few 100,000 in leveraged currency isnt much, many accounts offer a 100:1 on currency, and most I have give me 200:1.
I'm waiting till about Q1 2015 end to leverage, and put my money on an increase on ruble. I expect to make on the ballpark of 6-8M on it. Another good one to bet on is Canada. Their currency is pretty much glued to the price sticker of oil.