Translated material
Eurasian fall
Chinese stocks fell about 4% yesterday to a one-month low on reports that China may ease controls on food prices and crack down on speculation in agricultural commodities to curb inflation pressures.
“On Tuesday, at the beginning of trading, a downward correction was observed across the entire spectrum of highly liquid securities,” notes Anton Startsev, leading analyst at Olma Investment Fund. -- Reasons for the correction, which has become common in recent times, were found in Asia. The South Korean central bank's increase in the interest rate from 2.25 to 2.5% reminded traders of the risks of China's tightening monetary policy and caused a downward correction in Asian stock indices. In addition, discussions are heating up in the US financial community regarding the validity of the bond repurchase program, which remains an important factor in supporting global liquidity.”
The domestic currency also experienced a decline yesterday. The official dollar exchange rate increased by 19 kopecks, to 31.06 rubles. The euro exchange rate rose by 5 kopecks to 42.22 rubles. The cost of the bi-currency basket, which consists of 0.55 dollars and 0.45 euros, increased by about 15 kopecks. above the level of 36.15 rubles.
As dealers note, demand for the dollar from non-residents has increased due to risk aversion and attractive yields on American government securities.
“The market is again seeing a correlation between the ruble exchange rate and oil prices and the stock market. We believe it will hold for some time, but then could easily be disrupted again by capital flows. In the meantime, we believe that the dynamics of the ruble exchange rate against a basket of currencies will be determined by the negative interest of investors in risk,” say analysts from Troika Dialog Investment Company.
In addition, the deterioration of Russia's balance of payments may act against the ruble until the end of the year. The Bank of Russia raised its forecast for capital outflow from the country in 2010 to $22 billion. At the same time, the regulator pledged not to set fixed restrictions on the ruble exchange rate - these factors will put pressure on the domestic currency.
The dollar is also growing on the international Forex market. As noted by Boris Olshansky, head of the financial and stock markets department at B&N Bank, “euro quotes against the dollar during the European trading session traded at 1.363, reaching 1.356 per euro.” However, by the evening the euro moved away from its seven-week low against the dollar thanks to positive statistics from Germany.
“In my opinion, the dollar/euro pair this week will trade in the range of 1.352--1.372, and the ruble will trade within the bi-currency basket corridor of 36.05--36.25 rubles,” the expert predicts.