Comments on: Waiting to see how the Russians will react to Cypriot bank laws

By: Sean Lee

Sean Lee — Tue, 26 Mar 2013 20:08:54 +0000

Excellent info, thanks very much Kirill

By: Kirill

Kirill — Tue, 26 Mar 2013 09:48:53 +0000

In my opinon russian media reaction to the cyprus debacle was rather mild in intensity.It was more like coverage of some coup in the Africa, that is something that people would read, but not that important in a big picture. With overall bias towards: wow Cyprus is in trouble, not Russia in trouble. Again above is just an impression, but it gets me thinking that all banking taxes will be eaten by regular crowd: teachers pension funds etc…, with large oligarch deposits already gone elsewhere. Also muted reaction in CHF would be in favor of such conspiracy theory.
Also agree that Russian reaction would be of slow variety, so not really tradable.

By: zenfxtrader

zenfxtrader — Mon, 25 Mar 2013 10:18:27 +0000

I would think the fx issues are probably low on the Russians mind. This is a longer term geo-political power game with a lot of history behind it. Europe has probably managed to screw the Russians this time, but Russia will retaliate in some way over the coming months/years. Perhaps in the UN, or by tripping up European plans in the mid-east, or enacting new punitive laws targeting European businesses in Rusisia etc.

By: Kirill

Kirill — Mon, 25 Mar 2013 09:26:41 +0000

Overall russian stockpile of money is small, at least by Bernanke standards, so I would not consider Russian responce to be flow related

By: Kirill

Kirill — Mon, 25 Mar 2013 09:23:16 +0000

This one is a tricky one. In general russian economy is tied to Europe. Trade with US is nill, and there are a lot of barriers for moving money from russia to US. So it should not be USD positive outright, but russian money willdefinetely be on the move. Swiss and UK could be top destinations. russians never trusted Asia as wealth preservation place, so I would be surprised to see much movement in that direction. Also I noticed central america offshore zones as a recent addition to Russian portfolio. Dominican and Panama could get a bit ofrussian leveraged funds, those destination could provide indirect USD strength. On political direction we can see something gas related, but I doubt strong reaction. Overall it is a dangerous game for europe, because Russia was the reason EUR had less severe resession in 2008, at the time oil was 140 with already weak US, russia buying mercedeses with oil money did help germany then. Overall the most dangerous response from russian side would be to use oil revenues to buy goods from asia instead ofgermany.

By: Brijesh

Brijesh — Mon, 25 Mar 2013 09:19:12 +0000

This is one massive Game theory playing out in reality. I guess, the “final” outcome as of now is not in Russia’s favor, and it might not be in Russia’s favor to tip the European boat by initiating a ‘bank run or capital flight. But like all sinking games here, the first guy on the life-boat has more chance to survive. So, as long as world looks towards Russian reaction, it benefits Russia to hold still, and moment Rest-of-world goes bullish on Euro, Russia would pounce to exit it.

But of course its a ‘common knowledge’ hence people entering will be wary until Russia “clears” the bailout. But then anybody / anywhere could initiate or trigger an outflow.

In a sense, if somebody yells “fire,” its over. I am sure like everybody even Russia will wait until the Cyprus bank open to judge how situation on ground would be. If its a “run” it pays even for Russia to join the “run” (becoz next set of haircuts will come soon and/or be even more severe.)

Very interesting learning trade, even though I am on wrong side of it as of now. Tuition fee, paid. 🙂