From RBC magazine №3 for 2015, which will soon go on sale
Military panic
Black for rubles in 2014 could be a very different day – Monday, March 3. Two days before that, on Saturday, President Vladimir Putin appealed to the Federation Council for permission to use the Russian armed forces in the Crimea because of the “extraordinary situation prevailing in Ukraine, threatened the lives of citizens of the Russian Federation.” Council voted unanimously and instantly – Russia has officially announced the possibility to invade the territory of Ukraine.
At the opening of the first business day markets collapsed: the Moscow stock exchange index in minutes fell by 5.8%, RTS – 7 5%. Already by 10 am the dollar soared to 76 cents, to 36.6 rubles., Euro – 84 kopecks to 50.4 rubles. The Bank of Russia immediately began to extinguish the fire: pushed up the boundaries of the currency corridor, raised its key interest rate from 5.5% to 7% per annum and flooded the market currency. March 3 the Central Bank sold on the market $ 11.3 billion – only $ 2.7 billion less than in the previous two months, sinking panic in the cash flow. The dollar was able to brake at the level of 36.4 rubles., But the Central Bank continued to intervene all of March, selling currency in the past month by more than $ 22 billion.
entered the West in response to events in the Crimea sanctions were much less severe, than the market expected, which feared the trade embargo or off Russian banks from the international interbank settlement system SWIFT. Has not been entered and the state control over the movement of capital across borders, the need for which the height of the March events, said Putin adviser Sergei Glazyev. And the price of oil continues to hold above $ 100 per barrel. And gradually the currency market participants calmed down.
By the end of March, the dollar fell below 36 rubles., In mid-May – below 35 rubles., And in late June – below 34 rubles. Euro from the peak of 50.3 rubles. the end of June fell to 46 rubles. The Bank of Russia has returned to the old implementation plan: in 2012, he said the transition in 2015 to a floating exchange rate. In January 2014 the head of the Central Bank Nabiullina reiterated that one of the points of this plan will be the abandonment of foreign exchange interventions – in March, when the Central Bank not only refused, but also greatly increased its intervention Nabiullina often remembered her words. In early May, the Central Bank stopped selling the currency at the end of June – stopped buying it and left the market altogether. But at the same end of June, the oil began to fall.
Sanctions plus, minus oil
In early July, the US and after followed by the European Union announced the launch of “sectoral” sanctions to block access to cheap “long” Western money. Major companies such as “Rosneft” and Novatek, as well as major banks in Russia led by Sberbank and VTB could no longer take the West loans for more than 90 days, to place new issues of foreign currency bonds and attract equity.
More than that: sanctions gradually destroys the entire system of relations of these companies and banks with global financial markets, a deeper and more complex than it might seem at first glance. For example, as told RBC magazine treasurers of major Russian and international banks, sanctions gradually dried forward market.
In this market buy and sell currency, those who want to be sure that in a few months will be able to change rubles and dollars on understandable rate: in Russia is a huge part of the major exporters and importers. They make deals with major Russian banks, and they, in turn, with the global financial giants. After the imposition of sanctions global banks nervous – not perceive whether Western regulators forward transactions as prohibited loans to Russian companies and banks. And they began to close limits.
Gradually, this market has shrunk to a few hundreds of millions to tens of millions of dollars a day. The flames were fanned talk of the possible introduction of capital controls in Russia. Banks were worried that they could not convert rubles into foreign currency and vice versa, and in any case are pulling back from the sale of forwards. All pent-up demand spilled on the spot market.
Large exporters such as “Rosneft” came under a double blow: the fall in oil prices meant a reduction of foreign exchange earnings, it might not be enough to repay the loans in this and subsequent years, and the new Loans can not be taken because of the sanctions. In the autumn of the largest exporters reduced sale of foreign currency. “Banks will know about it immediately, because the currency gain is, and it does not sell. Banks immediately began to open positions against the ruble, “- says Eugene Egorov from the bank” Vesta “. Central Bank did not sell the currency from May. Capital outflows intensified all the time: in 2013 it amounted to $ 63 billion, by the end of 2014 – $ 150 billion. The demand for currency in Russia is becoming more and more of its offer – less.
In July increase in the dollar and the euro has resumed, but in early September, the Central Bank reiterated that before the end of 2014 dismantles the currency corridor, abolish “mandatory” intervention and complete the transition to a floating exchange rate. “We will go to the foreign exchange market with interventions at any time and in the amounts that are needed to bring down the excessive speculative demand”, – promised Elvira in an interview on “Russia 24″. When in early October, the dollar began to storm the mark of 40 rubles., CB returned to the market. But, sells for $ 22.3 billion in October, has not achieved anything at: October 31, 2014 the dollar was worth 43.4 rubles., Strengthened by 4 rubles a month.
Photo: TASS
game for sure
«When you know predictable, here that the Central Bank will sell, then falling by 5 cents, then it will be sold on and on, it’s the speculators act like a rag to a bull: his ho, ho! “- says the treasurer of one of the largest banks. October 31 Central Bank raised its key interest rate by 1.5 percentage points to 9.5% per annum. A November 5 CB abruptly canceled himself currency corridor, announcing the actual introduction of a floating exchange rate on 10 November 2014 and not from 1 January 2015, was expected by market participants. Strictly speaking, the date of January 1 bank never called. “All documents wording was” the end of 2014 “, ie in November – it is not until the time and date. But many really thought that “by the end of 2014″ should read “from January 1, 2015″, – said Nabiullina RBC by passing through a representative.
But why this should have been done in November? “We did not want to go against the market trend: it was clear that the exchange rate is reduced due to objective and sufficiently powerful reasons – explained the head of the Central Bank. – Such a sharp fall in oil prices that we saw in the fall, the market formed unidirectional expectations of all participants. Next to intervene and spend foreign reserves would be just wrong ».
In early November, the leadership of the Central Bank held two meetings with analysts and treasurers of the largest banks. “Discussions were: you see, abolished the corridor and nothing terrible has happened is,” – says one of the party meetings. “The meeting with the treasurer said, do not stand against the ruble will suffer losses, it will be unpleasant to us” – says the other.
The position of the Central Bank supported Vladimir Putin, who on November 10 explained the fall of the ruble speculative attacks, stating that fundamental factors and reasons for imbalances in the national currency does not. “If the Central Bank will hold some more liquidity, then surely punish speculators who were ready to further speculative actions”, – Putin said.
November 10 CB again stopped selling the currency, but returned after only three weeks Oil fell below $ 70 a barrel, the dollar took another “psychologically important” mark of 50 rubles. and flew on. CB threw on the market from $ 200 million to $ 2 billion a day, but it did not help – now the dollar rose to 4 rubles. just one first week of December.
At this point the market has a new main fear – “Rosneft”. Scored in debt more than 2.5 trillion rubles., Fell under the sanctions and two-fold drop in oil prices in the currency of the company needed: in it at the time it was nominated for nearly 90% of the debt. Almost half of the debt of “Rosneft” had to pay off in the fourth quarter of 2014 and in 2015. December 11, the company placed bonds huge 625 billion rubles., With the aim to call customers and attract money “Rosneft” refused.
Photo: TASS
«The deal was absolutely non-market, all understood that” Rosneft “to repay loans needed currency. There were fears that these rubles in whole or in part to splash out on the market “, – says the head of the dealing center Metallinvestbank Sergey Romanchuk. This question troubled all. Much later it became clear that “Rosneft” yet received currency in exchange for these rubles – but not in the market, and through a deal with the “discovery”. Finance Corporation took the bonds of “Rosneft”, laid them in the CBA, the currency received and gave it to the oil company.
But then this one does not know: what’s the difference, buy “Rosneft” currency or pay taxes received in rubles, not selling revenue – for the market outcome will be the same, they reasoned currency traders.
On the day of the bond placement of “Rosneft” December 11 Central Bank raised its key interest rate to 10.5%. According to the stories interlocutor RBC in government, some members of the Board of Directors proposes to increase the rate of stronger: “Otherwise, the ruble will catch no one knows where.” But the sharp increase is not passed. The head of the Central Bank at a press conference following the meeting promised that the bank “may at any time enter the market and create problems for speculators.” The market is not afraid of any rate increase or words Nabiullina, no intervention of the Central Bank, sold the 11 and 12 December, more than $ 2.8 billion: the dollar and the euro over the last two days has grown to more than two rubles each.
Black Monday
Over the weekend, bankers, traders and speculators were left to themselves: time to think about the influence of money “Rosneft” on the ruble was enough – and on Monday, 15 December rooted for Saturday and Sunday in the minds of market participants panic spilled onto the market. With the opening of the stock exchange in the morning on December 15 growth rates continued: by the 11:05 dollar was worth 58.7 rubles., Euro – 73.1 rubles. Market fever: the participants feared that came on the market or about to come rubles “Rosneft”, no one knew how many dollars in response to the Central Bank is willing to spend. Under the new policy, the Bank Russia has deliberately unpredictable: sitting “in ambush”, follows the course of entering the market and always suddenly.
By 14:00 the dollar has passed for 59 rubles., To 15:50 – for 60, in half an hour – for 61. “Previously, in such cases, the Central Bank took many billions and walked with them to the market, and all fled in fear, because the left tank, which is useless to fight. And then the Central Bank went on a motorcycle, and everyone began to catch his hands “, – says the source of RBC in a bank.
Currency grew so rapidly that the market is beginning fever. First with the stock exchange issued those who bet on the dollar’s decline. “Speculators soon shorts, thought that the dollar is about to unfold,” – says Romanchuk from Metallinvestbank. The dollar also went up, and began to exchange margin call “short” positions were closed by force. Romanchuk says that in such fast movements client physically does not have time to do something to save the position. “Broker you will not even ask, he will try to limit their losses, the client has no money. It is necessary to close the position by buying the dollar “, – says Egorov of” news. ” Then began to close positions, those who bet on the growth of currency: the level and looked so extraordinary. But the rise continued.
The Bank of Russia on December 15 intervened by selling per day $ 1.96 billion that the market did not seem to notice. By the close of trading on Monday, the dollar rose to 64.5 rubles., Euro – to 78.8 rubles. And only in the evening, when it became clear that the “rebound” is not going to happen, the Board of Directors of the Central Bank held an emergency meeting.
Twelve people sat on the marble hall of the mansion on Neglinnaia about three hours deciding what to do. On the meeting knew the entire market – in such cases the workplace remains linear Bank staff – but no signal was not out. Around 23:00 the Central Bank in vain tried to call the head of one of the largest banks. Only at 23:45 on cell phones specialized journalists fell SMS from the Central Bank, that will soon be a major announcement. It sent out around midnight – the central bank raised the key rate by 6.5 percentage points to 17%.
Absolute chaos
«It is as if the central bank posted on the facade of the white flag. Night hike says: “We are at a loss and do not know what else to do,” – said one of the Russian bankers. “They announced late in the evening to have time before the banks in the Far East, so do not wait for the morning Moscow time,” – parries Elvira. There is another reason: to avoid insider central bank must disclose the decision immediately after their adoption, and in the area of the board meeting is suppressed even mobile communications.
December 16 Nabiullina spoke on the channel “Russia 24″. “Raising the key rate is aimed primarily at reducing inflation expectations – she said – its impact on the currency market will be indirect and hardly an instant.” The ruble is undervalued in all respects, “but that he approached the fundamental course, it takes time,” added the head of the Central Bank.
The market in different ways: the words Nabiullina: many were preparing for the worst. “Today, absolute chaos. Dirty, disgusting, ugly and completely depressed market without buyers and sellers “,” Central Bank decision was absolutely unexpected and destroyed the local market, only around negative signals “- these letters exchanged that day traders investment banks. Optimists expected that the increase of the rate of the Central Bank will take a powerful intervention.
The market intervention scheme unraveled long CB and played with the regulator in this game: the Bank of Russia has long said that all this will stop, but not everyone believed that he had had enough of the spirit, the chairman of the board of the Moscow stock exchange, Alexander Afanasyev. Exchange opened growth of the ruble dollar immediately after the opening of trading fell to 59.5 rubles., Euro – up to 74.9 rubles. But already in the first hour of currency traders realized that the central bank money in the market. By 12:00 the dollar soared to 66 rubles., Euro – 82 above.
«signals by the Central Bank were contradictory: on the one hand, they say that the ruble is undervalued, and on the other – are afraid to sell an extra billion dollars. With one another not beat “- explains Romanchuk. Traders felt that the refusal of the Central Bank of currency sales is his confidence in the further fall of the ruble. At 13:00 Moscow time started trading in London, and the price of oil fell below $ 60 a barrel. On the Moscow Stock Exchange started to panic: By 14:00 the dollar was worth 69 rubles., Euro – 86.
«The market could turn around at any time, positions were cut, cut and cut, – says Romanchuk – all that was above 60, in my opinion, happened with minimal involvement of some speculators, banking community: it was unsatisfied customer demand. ” The demand for currency by the population was enormous – a customer calls and needed to buy the currency now and at any price, tell the staff of all the surveyed banks. People lined up to simpler exchangers, in which the course was still at 10.5 rubles. higher than the stock market. According to the Central Bank, in the fourth quarter of the population of Russia bought $ 18 billion of the $ 30 billion for the full year.
Traders have experienced the same feelings. “The course goes up, and the Central Bank does not react in any way, and there were a variety of rumors – says one of the bidders on the Moscow Stock Exchange. – Maybe we do not know what will now be a declaration of war, or our divisions have crossed the border, or there was a coup. Or the decision on the resignation of the head of the Central Bank, and therefore they do not do anything ».
Not only traders get nervous: apparently, inside the Bank of Russia did not have a clear opinion about the validity of the decision of the night. You can judge this by the sharp words of the first deputy Sergei Shvetsov Nabiullina, speaking in the day at a meeting on the development of the financial market.
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