Volga Capital: Profitable Russian Ruble (RUR) - Profit in Russia in 2017

    MOSCOW, RUSSIA, December 08, 2016 /24-7PressRelease/ -- US hedge funds have completely stopped their activity against the ruble, in November, short speculative positions to weaken the Russian currency (corresponding futures traded on the Chicago Mercantile Exchange - CME) decreased literally to zero - for the first time since 2011. However, optimism about the ruble, as well as rates for its strengthening, will be restrained, at least until the middle of December, when the FRS decision on changing the key rate it is expected. Nevertheless, one of the largest Russian hedge funds - VOLGA Capital - confidently noted a number of factors acting in favor of the strengthening of the national currency.

During the last, for this year, meeting of the Federal Open Market Committee, a decision to increase the base rate may be taken by the US Federal Reserve System. The growth of the key rate strengthens the dollar and reduces the prices of primary commodities, which in turn, negatively affects the currencies of economies focused on primary commodity exports, including the economy of Russia. The intention to increase the key rate appears from both the last communique of the Federal Reserve System, and from the words of Janet Yellen, the FRS Chairman: In November, she announced this event as occurring relatively in the near future.

Donald Trump's winning of the presidential election has caused some uncertainty, and could again delay the increase in rates, but the probability that this will not happen, is nevertheless rated as 9 out of 10, and the world markets have, in many respects, taken into account an increase in quotations. Therefore, the current rate change (if it takes place at all), at the moment, will have a limited impact on primary commodity assets. Especially, in view of the OPEC deal to cut oil production. This decision, reached also through the personal diplomatic efforts of Vladimir Putin, has led to a sharp increase in prices of the BRENT mixture. Now oil prices are starting to grow, and its path is open to $60 a barrel. These levels are expected in the first quarter of next year, which will give additional strength to the ruble in the future.

Stas Mashagin, CEO of the VOLGA Capital hedge fund: "The intention of the Ministry of Finance to increase borrowing in the domestic market, to cover Russia's budget deficit -- from 300 billion rubles to 1.3 trillion rubles -- is an important factor that can have an impact on government bond yields, and the strengthening of the national currency. Additional interest is the upcoming privatization of Rosneft, and the completed privatization of Bashneft (bought by Rosneft). If the shares of Rosneft itself (19.5 %) are also (same as Bashneft) sold without the participation of foreign investors, the successful completion of the transaction, once again, will require a large amount of ruble liquidity, which will also support the ruble. A strong ruble is the basis of the most profitable investments in Russia in 2017. We see a huge number of extremely reliable projects (not yet public) for investments, with high returns both in the currency of Russia (12-15 % per annum) and in US dollars, and in the currency of the European Union. (From 5-7 % per annum and above)."

VOLGA Capital PJSC is a Russian hedge fund specializing in stock exchange transactions and direct investments into their own projects. VOLGA Capital carries out transactions with currencies, stocks, exchange-traded commodities, futures and options on the derivatives market. One of the largest MOEX platform players, VOLGA Capital also provides liquidity to trading participants of the NYSE and CME.

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