2016 was a good year for the Rouble ( it performed second of
all emerging market currencies) It even improved vs the dollar in the last
couple of months ; no mean feat when the dollar was benefiting from the Trump
bounce.
Last year’s conditions are however ended, and we start the
new year 2017 with a quite different environment.
January and February are mixed. There is still momentum from
investors buying but there is no clear information at this stage. There is also
a long term underlying weakness that will continue throughout this year. As a
result I am not expecting an upwards trend in value , although occasional
boosts are likely. Overall a rather dull period.
March to May is a little more exciting. There is likelihood
of increased volatility. Overall investors are nervous, but not sure which way
to bet. No great long term rises can
therefore be expected, but there is probably enough momentum for some shorter
term gains.
June to August is a very mixed period again. There is a lot
of minor adjustments to positions but very little major changes. The
combination of worried investors, looking for threats together with a layer of
hope, probably creates support but little gains.
September is a more difficult month when the negatives
outweigh the positives, selling will be vigorous and the currency is likely to
be weaker. October, however, sees this trend reverse with a boost. After which
the currency is probably back close to its 1 September values.
November and December are a little different. There is still
the inherent concern and there is also a return to short term volatility, but
this is also accompanied by some very positive sentiment and increased support
on the downside. November is likely to be very positive then. The year- end,
however, might see a pull back- though
the net effect is still likely to be a stronger currency come year end.
The mixed environment continues into early 2018. Indeed,
January and February are really quite similar in tone to 2017. There is however
more focus on the Rouble now than in the previous year and there is much less
upward momentum than in October and November.
March to May is one of those periods when anything can
happen. Expect large sudden movements in value.
The wider environment is changing and this is going to be
positive for the Rouble. I expect a big upturn in value in this period.
June to August is more moderate in tone. There is too much
uncertainty for investors and locals alike to create any great sense of
direction. There is also less volatility than in the previous three months. I
expect the picture to be relatively unchanged for this quiet period.
September to October sees another period of mixed outcomes.
There maybe trading issues or big announcements and the uncertainty that
plagued June to August continues. However there are sufficient positives to
suggest another increase in value but perhaps on a lesser scale than before
June and not without some days of pull back.
November to December is interesting for bringing to and end
the long period of investor doubt associated with the currency. There is still
a very unclear environment, but events may have created a much more stable and
attractive position for the currency.
Indeed the year end may be characterised by some big jumps
as investors overreact on the upside.
January and February of 2019 are months of some very active
trading and switching of positions in general and the Rouble is no
exception. The period is likely to see
dramatic shifts where the currency is strong vs some major ones and weak versus
others. A difficult period to read at
this stage.
March to May continues the drama and will likely be a
volatile period. There is still a broadly uncertain picture but investors have
become more decisive and committed. Big movements vs other currencies are likely
and although the environment is tough there are positives on the upside. Again
I find this hard to assess at this stage and will revisit it in 2018.
June to August sees big swings in investor sentiment. There
may be currency reorganisations going on. There is still a lot of confusion and
position switching.
September to November sees this amplified. Extreme
confusion- really the value of the currency could do anything now, there are
major inflationary influences – the only question is whether this is inflation
that weakens the value of the Rouble or whether it represents inflation in
value of the currency itself.
What is clear is that although the picture continues into
December, that investors are far more likely to see the currency as more
clearly attractive then.
2020 is another key year for the currency.
January and February start with major flows of funds. Although
there is still some uncertainty as to whether this represents weakness or
strength, at this point I’m going with strength for the currency.
March to June is a very busy time for exchange and
transactions.
But whereas the picture in January and February showed risk
the picture for March to June is more representative of major gains. Big
international debt and banking movements are certain, and certainly much of
this seems to favour the Rouble rather than the opposite.
June to September sees conditions much like those of January
and February but with a pleasantly surprising upside for the currency despite
what maybe unfavourable rate changes.
October and November see the final stage of the situation
and there is one more concerted push in the direction of movement that
characterised March to June.
December is calmer. There may be more transformation for the
currency but value wise things are more mixed, with small adjustments rather
than big shifts. It is probably a time of little movements as gains and losses
offset..
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