FX companies in Eastern Europe hopeful for steady growth in Russia and the CIS region
Unencumbered by the imminent regulatory restructure in the form of MiFID II and EMIR, FX firms which operate from European jurisdictions outside of the European Union have thus far had a free reign to capitalize on the ever-increasing prominence of garnering business from Russia and its nearby Eastern European neighbors.
For retail FX companies located within close proximity to such markets, a positive dynamic has begun to make its presence felt. One such firm is Forex4You, whose CEO Max Lebedev today explained to LeapRate that “Typically Russian market share accounts for more than 65% of our total volume, and during the first two months of this year we are noticing significant growth in Russia, to put a figure on it, trading activity from Russia has increased by more than 10% compared to average monthly volumes in the last quarter of 2013.”
Forex4You is located and licensed in the British Virgin Islands, with its development task force in Latvia.
Mr. Lebedev continued to endorse the importance of maintaining a strong client base in other Eastern European nations by stating that” in other Eastern European and Commonwealth of Independent States (CIS) countries we gained a strong demand as last year drew to a close, as well as the first part of 2014.”
Whilst Latvia, along with certain other nations within the Baltic region having enjoyed a growing economic and financial markets structure during the last few years, and having mitigated the effect of the financial crisis that blighted many western European countries, this year began with a degree of uncertainty as a result of political and civil unrest within Ukraine, one of the region’s prominent target markets. whilst Mr. Lebedev explained that there had been a minor downturn in volumes during the early part of 2014, his perspective conveys that the Ukrainian unrest has had negligible effect. “Ukranian and Russian volume remain strong this year” he said.
Having conducted further research into the actual impact on FX volumes that the Ukrainian crisis has actually made, an industry source explained to LeapRate today that “There has been no decrease in the clients’ activity, but there are certain risks associated with conducting business in the region.”
There has been a great deal of industry discussion over recent months as to the future of the Russian ruble, and the government’s aspirations toward not only encouraging a fully regulated FX industry as reported recently by LeapRate, but with its sovereign currency attempting to achieve major currency status.
Mr. Lebedev draws a comparison between the ruble and another favored currency – the Chinese yuan, however he considers the recent increase in demand for ruble liquidity to be attributable to Russia’s keen will to become an international force to be reckoned with, as demonstrated by recent high demand for ruble liquidity.
“In my opinion, the Russian ruble has much more chance to become major not-so-long feature comparing to same Chinese yuan” is Mr. Lebedev’s opinion. “Anyway, this is not a question of 2-4 years, and heavily depend on the behaviour of current major pairs. Russia is playing much more active role on international arena, and this is why the ruble might continue to be very interesting for investors, but for now it can be of interest for mostly speculative deals” he concluded.
In terms of volume, Forex4You has experienced an increase of 3% in volumes for the first two months of 2014 compared to the average daily volumes experienced during the initial period of last year, amounting to slightly above $17 billion per month in monetary terms.
For more on the global Forex industry see the LeapRate-Dow Jones Forex Industry Report.