So the russian rubble had a pretty rough year so far and has fallen through the floor. My question is, since this is mostly related with oil prices isn't the rubble bound to bounce up again? Could investing right now when it's cheap turn out into profit later? How much of a bad idea is that and what would be better alternatives for the time being?
Not when they're printing the fuck out of that shit to deal with their massive government budget deficit...
(I am only assuming this is one of the ways they are dealing with falling commodity prices and their reliance on commodity export)
I thought the same as you but in forex if you go short on the ruble you have a spread of 5000 pips so if you buy rubles at 85 for example, you are buying ruble at 84.5 more or less and you start the operation with a huge loss.
The ruble will gain strength definitely but how? 1 year, 3? you can assure that 85 or 90 rubles will be the ceiling of the currency? you have the money to hold that operation?
Well, I think it might be an idea if you exchange it on pikes like current and buy Russian stocks. Exporters for example. But inflation is very different in roubles. 11 -15% against I guess 5% in euro. The problem is the currency rate changes fast and you have to do it fast. Most likely it will go up with oil prices, but I think oil companies stock prices will go up faster / better then rouble itself.
I don't think they're printing money to cover that yet.
So far they are just not propping up the ruble (compare that to their interventions over the past two years) and hoping the devaluation will work.
>Do you think oil will go back up soon
Personally, I think it's not going to be until 2018 that oil prices return to the $82 a barrel Russia needs to balance its budget.
And that assumes the Saudis/OPEC don't cut production and that the world economy still chugs along although at a slower pace. If we do see another recession, then kiss the Ruble goodbye.
Most of you are probably too young to remember the Russian default of 1998. Read up on it since it's more than I care to explain. Just look at how much the Ruble devalued then.
Main problem is, oil is Russias' main export good, and with the cost of extraction at $70 a barrel until oil goes over that they're fucked. Especially that Iran is joining the international market with fuckloads of oil stocked up.