Ruble note

Economic-policy signals coming out of Ankara have sent the Turkish lira into a tailspin in recent weeks. For currency traders, it has also suddenly made the Russian ruble look like a haven currency.

Russia’s currency is often lumped together with other high-yielding emerging-market currencies in the European time zone, which offer attractive carry trade opportunities. With the risk of US sanctions now receding into the background – amid Russia’s apparent cooperation on efforts to rein in Iranian influence in the Middle East – the ruble is reaping the benefits of the troubles plaguing other EM currencies.

Bloomberg reported on Wednesday that the ruble generated the sole carry-trade return for the month of May, due in no small part to Turkish Prime Minister Recep Tayyip Erdogan’s mismanagement of economic policy.

“The ruble is behaving like a haven currency in our time zone right now,” Inan Demir, an economist at Nomura, was quoted as saying. “The ruble is benefiting from the oil price trend, it is more insulated from the higher Treasury yields given that it doesn’t have external financing needs, and in contrast to the lira specifically it enjoys a credible central bank.”

“Both the lira and the ruble are plagued by geopolitical worries,” said Phoenix Kalen, a strategist at Societe Generale SA in London. “But the ruble is on the right side of the oil/commodities dynamic and possesses a much more credible, sensible and independent central bank.”