Report: Carry trade operations reach $2–5 bln in Russia – cbanker

MOSCOW, Apr 4 (PRIME) -- Foreign currency inflows to Russia through carry trade operations stands at between U.S. $2 billion and $5 billion, Central Bank Chairwoman Elvira Nabiullina said in an interview to Forbes published on Tuesday.

“We do not differ much from other emerging markets in carry trade. The carry trade volume is not big, our estimates show it at between $2–5 billion. The volume is approximately at the level it was in 2012–2013. We see no outburst in it. Yes, carry trade provides a slight impact on strengthening of the exchange rate (of the ruble), but it is not big,” she said.

Investors usually borrow currencies of emerging markets, convert them in rubles and invest in ruble instruments with a high yield. The central bank’s key rate maintains the high yield of these instruments. But in order to attract money of speculators to the country, carry trade also has to have premium for risk and volatility of currency of a country, she said.

“Volatility of our currency is decreasing and it is rather low right now. The ruble rate is not fluctuating as strong as it did in 2014, but it looks similar to currencies of other emerging markets, this is why the risk premium has fallen. Thus, the range of rates has contracted as we are cutting the key rate and the U.S. Federal Reserve System is raising it,” she said.

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