Ruble Futures Continue to Trade

 

The Russian Ruble has been under pressure for most of the year due to Western sanctions over Ukraine and the falling oil price. The Central Bank of Russia  historically used a policy of intervention to smooth out FX volatility , but this costs them foreign currency reserves. Russia has spent more than $70bn supporting their currency since the beginning of 2014. They have also used a series of interest rate hikes to try to defend the Ruble, culminating with the latest dramatic rise from 10.5 percent to 17 percent on Dec. 16. However there were fears that Russia may introduce capital controls and this led to the all-time low on Dec. 17 of over 79 Rubles to the U.S. Dollar (USD). The Ruble has since strengthened due to more intervention.

Many OTC FX venues , including Bloomberg Tradebook , FastMatch, FXCM and Alpari have halted Ruble trading. According to FastMatch`s CEO, some prime brokers are suspending settlement over the holidays, with many banks stopping quoting, widening spreads or showing one-sided markets.

The cash market is suffering from impaired credit and our futures give equal access to pricing across International and Moscow markets.

CME Ruble futures have continued to trade through this volatile period, and as they are cash settled in USD , there are no Ruble settlement issues to deal with. This has led to several inquiries this week from international banks requesting more details on our Ruble contract.

This underlines the severity of events, and the reason the Ruble will remain a news story even outside of the financial world.

 

Nigel Manthorp is Director of FX Products at CME Group. He is based in London.

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