The Russian currency on Monday became one of the main beneficiaries of the political crisis in Turkey: the background of the flow of funds from Turkish assets, the ruble shows the fourth highest growth among currencies of developing countries, follows from the data Bloomberg.
Turkey lost its investment attractiveness in 2016, if President Recep Tayyip Erdogan will not take a course on political reconciliation, analysts of “Renaissance Capital”. In this regard, Russia, Brazil and South Africa are becoming more attractive alternatives (Russia — since the slowdown in inflation opens the possibility for further rate cuts by the Central Bank), writes the investment Bank. Because Turkey is often perceived competitor to Russia for money of portfolio investors in the region, “the worsening perception of Turkey as a result of Friday’s events can lead to transfer part of the funds global funds in favor of the Russian market,” agrees chief analyst at VTB24 Stanislav Kleschev. The same opinion — at Sberbank CIB Russian market as a relatively lucrative alternative markets in EMEA [emerging Europe, middle East and Africa]” can attract a significant part of the funds that are derived from Turkish assets.
As of 16:20 GMT, the ruble has appreciated against the dollar by 0.6% — the fourth day after the South African Rand, Turkish Lira (which plays a powerful Friday’s decline) and the Polish zloty. For one dollar on the Moscow stock exchange of 63.14 give RUB compared 63,51 RUB at the close of Friday’s trading. The Russian currency becomes more expensive despite the lower prices of oil: Brent futures at 16:30 Moscow time have fallen in price on 1,6% (up to $of 46.85 per barrel) on the background of unmet concerns regarding the supply and transit of energy resources via Turkey. Oil tankers load and unload the fuel in Turkish ports without interruption, pipeline deliveries are as usual, said yesterday the Ministry of energy of Turkey.
Starting in 2016, the ruble has risen by 16.6%, second in growth in emerging markets Brazilian real, according to data from Bloomberg terminal.
A failed military coup in Turkey was another “black Swan” this year, along with Brexit and the increasing probability of winning of Donald trump in the presidential election in the United States. All of this suggests a “marked strengthening of political risk in systemically important countries,” write the Citi analysts. But contrary to the initial expectations of the global markets today responded to the Turkish crisis relatively quiet. “The news from Turkey, of course, will lead to higher risk premiums in the evaluation of the Turkish assets. However, we do not think that these events will significantly affect the global perception of risk, despite the importance of Turkey both from the point of view of scale, regional and geopolitical role,” wrote on Monday, analysts at Sberbank CIB.
Turkish Deputy Prime Minister Mehmet Simsek yesterday dedicated two-and-a-half hours of communication with institutional investors and analysts in a phone conference: official reassured that the government fully controls the situation, and macroeconomic indicators of Turkey no cause for concern. Attempts of coups in democratic countries do not lead to any significant deterioration in economic growth, says Bloomberg columnist, Professor of Economics Tyler Cowen, citing analysis of the Stockholm Institute of transition economies. This may be one reason why the financial markets have not panicked because of the Turkish events, writes the economist.