Access the inaccessible; the emerging FX markets of Russia and China

Thursday, August 16th, 2018

By Julie Nicolas, MD, The Finance Hive

Break down your misconceptions regards the Russian and Chinese markets; RUB-RMB liquidity improving, these are both open active FX markets and more importantly access to that liquidity is improving.

Here are the top 10 discussion points raised by our senior Buy Side FX members at recent Finance Hive Global FX meetings in London and Boston;

1. The Russian Rouble is free floating, it is a safe marketplace to trade, regardless of the geo-politics.

2. Many Buy Side traders who actively trade RUB have many examples of how it is easy to trade and access the market and, importantly how profitable it is to trade the market.

3. Russia has a real interest rate of 7% and despite sanctions, there are many USA banks and clients investing in Government bonds and the Russian market.

4. The Russian market has a good source of bank and non-bank liquidity; 50% of liquidity comes from overseas investment.

5. The Russian economy is strong, less oil dependent, well regulated, MiFID II compliant and transparent

6. Sanctions have a negligible effect with Russia attracting real yields for investors under sanctions.

7. The potential of RMB-RUB trades is high paving the way for alternative capital markets away from USD.

8. Confidence behind the RMB is growing and clearly China aims to strengthen and globalise the currency

9. The international usage of RMB is set to increase with the Chinese Central Bank’s increased intervention and the fact that Chinese companies are making more RMB-dominated investments overseas

10. The RMB certainly leads the way in terms of Asian currencies, particularly given China’s dominant position in the Global Commodities

If you are a leading Buy Side professional interested in candid, informal discussions regards emerging FX markets, then register here to join the Finance Hive.

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