Hedge Funds Returning To Russian Ruble As Oil Stabilizes

Oct 16 2015 | 5:22pm ET

Institutional investors are bullish on the Russian ruble for the first time since early summer, according to data released today by the CFTC. 

Hedge funds and other large speculators were net long 1,171 futures contracts on the currency in the week through Oct. 13, according to the regulator, betting on a rise in the currency. They were net short the ruble in the prior week. 

Prospects for the Russian currency have improved since the summer rout in emerging markets and commodities amid recoveries in energy and other markets and signs the oil supply glut has been priced. The ruble was the worst performing major world currency between mid-May and late-August as oil, which is Russia’s largest export, fell to 2009 levels. The decline forced the Central Bank of Russia to sharply hike interest rates in response.  

Meanwhile, oil has stabilized around $50 a barrel for Brent crude, as investors digest the extreme volatility in risk assets over the past several months. Although now engaged in Syria, tensions with Russia over its annexation of the Crimea and its ongoing support of separatists in eastern Ukraine have eased. Accordingly, the ruble has risen 16% since the end of August, the highest move among emerging market currencies over the period, noted a Bloomberg article on the CFTC data. 

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