Forex is tuned to the lira – Newspaper Kommersant No. 32 (7477) of 02/21/2023

Since the beginning of March, the number of available currency pairs has been expanding for clients of the Russian segment of the forex market. The pairs with the Chinese yuan and the Turkish lira, which are already successful on the Moscow Exchange, may turn out to be the most popular pairs, the Indian rupee also has prospects, experts say. At the same time, the forex market remains highly risky and mostly unprofitable for clients, and new currency pairs are unlikely to seriously change the situation.

The Bank of Russia has published a new version of the basic standard for forex dealers, which expands the list of currency pairs for transactions – from 48 to 61 positions. Chinese yuan, Turkish lira, Indian rupee and Brazilian real have been added to quoted currencies. The list of news agencies whose quotes and historical data can be used to calculate the amount of cash security has also changed. Thus, Just2Trade Online Limited, GKFX Internet Yatirimlari Limited Sirketi and Interactive brokers Llc have been removed from the list. Tavira Securities Limited and Prime Brokerage Services (Belarus) have been added to it. The document will come into force in early March, ten days after its publication on the Central Bank website.

The expansion of the list looks redundant: now, of the available currency pairs, forex dealers offer customers only 24-36. For example, the US dollar/Saudi riyal and US dollar/Israeli shekel pairs are not represented by any dealer, while the euro/US dollar pair accounts for more than half of the market turnover (see Kommersant of January 31).

Nevertheless, market participants call the expansion of available instruments a positive factor. According to the head of the Association of Forex Dealers (AFD, it was she who prepared the updated version of the basic standard) Yevgeny Masharov, new pairs are included in the list “based on the results of a survey of AFD members and traders’ requests.” In addition, forex dealers have the right to receive quotes from more than one supplier. In such circumstances, Mr. Masharov expects “an influx of clients of both categories: qualified and unqualified investors.” Licensed forex dealers did not promptly answer “Kommersant”.

Demand for currency pairs is largely determined by Russia’s trade and economic relations with the relevant countries, said Sergey Suverov, investment strategist at Arikapital. Therefore, the expert expects that the ruble/yuan and ruble/Turkish lira pairs will be in high demand first of all. According to Mr. Suverov, the yuan “will lead by a wide margin”, which is due “to demand due to large imports from China and the yuanization of the Russian financial market, the issuance of bonds in yuan by many Russian companies.”

According to Kommersant’s estimate, since the beginning of the year, the share of the yuan in the total volume of trading in major currencies on the Moscow Exchange has exceeded 36%. In 2022, ten issuers placed 21 yuan bond issues on the Russian market for more than RUB 600 billion. In February, exchange volumes of trading in the Turkish lira began to grow (see Kommersant of February 13). According to RegBlok chief analyst Anna Avakimyan, “the Indian rupee is also in the zone of high potential.”

“The limited client growth is primarily due to the fact that the volume of trade and foreign economic contracts with countries whose currencies are included in the dealers’ toolkit is not as large as we would like, because of this their functional movement is largely limited,” says Ms. Avakimyan. “The exchange rate of the ruble against these currencies, one way or another, still appeals to the positions of the US dollar.” Sergey Suverov adds that the popularity of the forex market as a whole is reduced by its high volatility and unpredictability, as well as restrictions for unqualified investors.

Ksenia Kulikova