Rising oil and gas prices have helped the Russian ruble hit its highest level against the euro and the US dollar in more than a year. Russian stocks reached record prices. In September, the ruble was the only emerging market currency that appreciated against the US dollar.
The Russian currency appreciated more than any other emerging market currency this month on the back of higher oil revenues. Russian equities also outperformed the equities of other emerging markets, some of which fell significantly.
Other factors that make Russia an attractive investment destination include the country’s financial reserves of $ 600 billion and low debt burden. In addition, the Russian central bank is pursuing a tough monetary policy and is trying to bring rising inflation under control by raising interest rates.
The country’s oil exports were reportedly valued in local currency on Monday morning at a record 6,000 rubles per barrel of Brent crude.
London-based hedge fund Carrhae Capital shifted some of its investments from Chinese tech stocks to Russian energy companies in the third quarter. The US investment company Wells Fargo Asset Management also shifted its funds from China to Russia, reported Bloomberg.
JPMorgan Chase added to its position in the Russian Depositary Index, according to the agency, as it continues to bet on commodities and oil-related bets this year. JPMorgan analysts stated:
“Higher oil prices will result in higher yields and dividends on energy stocks, which make up 59 percent of the index, and fuel a stronger ruble, which in turn drives domestic stocks, which make up an additional 25 percent of the index.”
“Therefore, the index is basically perfect as an equity instrument for our bull market in commodities and especially in oil.”
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