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Screenshot of a breaking news alert e-mail from Q2 2017
With the ruble drama gathering steam in December and particularly this week, we have seen ruble dealers slash their leverage and also completely pull out of dealing in the currency, which isn’t a huge generator of volume to begin with but still causing a big enough shakeup for brokers to issue statements to traders. With all of that in mind there were two other major brokers in which ruble trading is as normal…for now.
First, Russia’s ruble traded normally on EBS, owned by London-based broker ICAP (LON:IAP). It is worth noting that the ICAP subsidiary has been a major provider of liquidity for the ruble the last few years. Secondly, Reuters was reporting that retail and institutional FX brokerage giant Gain Capital (NYSE:GCAP) said it is business as usual in terms of ruble trading. In the case of Gain, the company said it increased the margin requirement for trading in the U.S. dollar/ruble to 20% (5:1 leverage) from 2% (50:1 leverage). This means that customers who want to deal in the currency pair should deposit at least 20% of the total funds required for the trade.
Through all of the hype and panic, it looks as if the situation will take time to play itself out, as the Russian Central Bank has even forewarned of ruble weakness in 2015. You have to remember as well, these were the intended effects of Western sanctions to rough up the Russian economy a bit after the West attempted to ward off what it viewed as aggression towards it’s neighbors. Maybe it is time for a new ‘reset’ button with the Russians to avert a panic or crisis situation which no ordinary Russian citizen wants to see. Stay tuned to LeapRate…