Currency players pulled out of offshore – Newspaper Kommersant No. 17 (7462) dated 01/31/2023

In the fourth quarter of 2022, clients of Russian forex dealers again suffered losses from market operations, although significantly less than in the previous quarter. Nevertheless, the number of clients is not decreasing, on the contrary, companies note the return of clients from offshore jurisdictions. In addition, market participants expect the expansion of currency pairs available for trading, primarily due to the Turkish lira and the Chinese yuan.

According to Kommersant’s estimate based on data from Russian forex dealers, their clients in the fourth quarter of 2022 suffered losses in the amount of 422 million rubles. This result is lower than in the third quarter of last year (loss of 616 million rubles, see “Kommersant” dated October 31, 2022), but more than the losses of a year ago (367 million rubles). The total number of accounts slightly exceeded 12 thousand, remaining at the level of the previous quarter, while two-thirds of them showed a negative result.

According to Alfa-Forex CEO Kirill Dronov, clients are gradually returning from offshore jurisdictions where payments are difficult and websites are often blocked.

“In general, this year we expect the trend to accelerate and the customer base to grow by another 30–40%,” he added.

The list of instruments for the forex market in the Russian Federation is limited by the Central Bank, there have been no significant changes recently, market participants note. Clients can trade from 24 to 36 currency pairs (depending on the company). As a rule, based on the world’s leading currencies – the US dollar, the euro, the Swiss franc, the British pound sterling, the Japanese yen, the Swiss franc, as well as the Canadian, Australian and New Zealand dollars. Sometimes they go for expansion at the expense of less popular currencies – the Mexican peso or the Norwegian krone (“BCS-Forex”), the Danish krone, the Singapore dollar and even the ruble (“Alfa-Forex”). “But, as practice shows, the EUR/USD currency pair, as it gave more than half of the entire turnover, continues to give, and the situation is unlikely to change,” says Kirill Dronov, head of Alfa Forex.

The financial result of clients of forex dealers depends on the trajectory of movement of currency pairs and the correctness of short-term and medium-term forecasts of dealers for this indicator, Anna Avakimyan, chief analyst at RegBlock, explained. According to Investin.com, after a solid strengthening of the dollar in the global market for three quarters, the end of the year saw a generally expected weakening. The euro rose by 9.2%, the Japanese yen – by 9.4%. In addition, the ruble weakened at the end of the fourth quarter, partly offsetting the strengthening of the third quarter.

At the same time, the launch of new currency pairs using Chinese yuan and Turkish lira is expected in February, market participants note.

This issue is being discussed with the SRO and the regulator, said the head of Alfa-Forex, Kirill Dronov.

According to BCS Forex General Director Taras Danilyuk, “as part of joint activities with the Association of Forex Dealers (AFD), a new edition of the basic standard was prepared, expanding the tools available to traders by 13 currency pairs.” In addition, he adds, market participants and the AFD continue to work “on proposals for a bill on dealer activity in order to add other types of instruments to the range of Russian forex.” At the same time, the Turkish lira is one of the most volatile currencies: in 2022, it has fallen in price against the dollar by 40%, and in two years it has decreased in price by 2.5 times.

At the same time, the unprofitability of the product for customers will continue, since the market has extremely high leverage and almost any volatility leads to the closure of positions, says Dmitry Alexandrov, Managing Director of Ivolga Capital. The position of the ruble is now influenced by many factors, but the global currency market is also very unstable due to the debt crisis and active changes in interest rates by global financial regulators, he explains. Such periods, Mr. Alexandrov emphasized, are unprofitable for clients.

Ksenia Kulikova