Morgan Stanley analysts predicted a “death cross” for the ruble. Should we wait for the fall?

Since the introduction of US sanctions on April 6, the ruble has fallen 5.4% against the dollar. And although it won back most of the fall - in the first days after the sanctions, the ruble fell to 64 rubles / $ - this is a temporary lull, writes Bloomberg, citing Morgan Stanley analysts.

Details

• The bank's analysts advise waiting for the ruble to fall to 66 rubles/$ - on Wednesday the dollar is worth about 61 rubles.
• They explain this forecast with technical analysis data: for the first time since July 2015, the 50-day moving average of the dollar-ruble pair is about to cross the 200-day one.
• Traders call this pattern a “death cross,” which means that the short-term uptrend will end and the market will begin to move down. When such a picture appeared on the charts three years ago, the ruble fell by 30% over the next six months.

Should we wait for the ruble to fall?

• Analysts interviewed by The Bell are sure that everything is not so bad: predicting the change in the ruble exchange rate based on technical analysis alone is inefficient. His data is important in the context, and there are no fundamental reasons for a sharp weakening of the ruble yet.
• The ruble is now supported by a stable oil price, while its growth is slightly restrained by the purchases of foreign currency by the Russian Ministry of Finance and the gradual outflow of investors from Russia.
• The Russian currency could fall sharply in the event of sharp shocks - for example, a new round of conflict in Syria or a round of sanctions. If this does not happen, it will remain in the range of 60 rubles/$ to a maximum of 64 rubles/$. Nordea Bank's forecast for the next three months is 61.5 rubles/$, Renaissance Capital's forecast is 60 rubles/$ until the end of the year.
• Also, the ruble will be influenced by the willingness to take risks and the attitude of investors towards emerging markets in general. Given that the US Fed is likely to raise rates four times instead of three, as previously thought, these markets may look less attractive than they are now.

Anastasia Stogney

The material uses the comments of Oleg Kuzmin, Chief Economist of Renaissance Capital Investment Company, Sergey Romanchuk, Head of the Metallinvestbank Dealing Center, and Denis Davydov, an analyst at Nordea Bank.