How do the 2014 sanctions affect the development?
Economic sanctions imposed on Russia in one way or another affect not only the interests of political circles, but also virtually all spheres of economic activity. Economic restrictions have already had a noticeable impact on the investment climate in the country, affected banking activities, complicated trade and economic activities. And how did the foreign exchange market react to the sanctions? You can’t say that the reaction was particularly violent. After all, the speculative market itself is little dependent on external local economic fluctuations, especially in the short term. However, when making long-term forecasts, new economic conditions and factors of influence will have to be taken into account unambiguously. After all, they will have an impact on the development and prospects of the market in the near future.
How do sanctions affect the development of the Forex market in Russia?
Let’s consider the problem of the impact of sanctions from the point of view of an ordinary trader. What can have a negative impact on its trust in the Forex market during a difficult period for the economy? The main fears of consumers of brokerage services are traditionally associated with the integrity of brokers during the crisis. It is precisely in moments of financial instability that unscrupulous intermediaries may decide to implement a fraudulent scheme or “go down”, dragging investors’ funds with them.
Actually, the risks here are greatly exaggerated. And it’s not that the Forex market is not too connected with the main economic processors and works locally, based on the principles of supply and demand. The very structure of this currency trading platform does not imply any special risks for large players – dealing centers and brokerage organizations. Thus, in the crisis year of 2008, when the banking system in many countries collapsed, Forex investors continued to earn, not just saving, but increasing their capital. So it doesn’t make sense to panic yet.
Reality and myths: Forex risks in the context of economic isolation of the Russian Federation
Global economic changes, even within a single country, always have an impact on stock markets. Thus, in 2008, in the midst of the global economic crisis, it was the investors who chose to place their own assets in this segment of the market who suffered the greatest losses. But the indicators of the Forex market for the same period almost doubled, along with the capitals of investors. And that’s not surprising at all. After all, what has a negative impact on the stock market – namely, high volatility, on the Forex market has a rather positive impact. After all, the increase in volatility gives an increase in the number of deals concluded. And this, in turn, affects the overall spread size.
What is the real risk of the Russian Forex market? On closer inspection, nothing. After all, in the absence of legislative regulation, most brokerage companies operating in Russia are registered abroad. And their activities are regulated by the legislation of the state, the tax resident of which is the company. Simply put, the lion’s share of dealing centers in Russia is simply not affected by sanctions. And they can influence, and even indirectly, only the work of brokers operating under the auspices of banking organizations.
Read an interesting article about the participation of banks in the provision of brokerage services in the Forex market in the article: Bank Forex.
To learn more about the regulation of the Forex market and its regulators, please see the section “Regulatory organizations”.
Another point of concern is the refusal to work with the Russian segment of the market for representatives of the largest payment systems. However, these “economic weapons” have already proved to be untenable, even in the context of the partial economic blockade. And the prospects of using international payment systems as a means of influencing the Russian financial market do not look particularly frightening today
It is worth noting that any economic sanctions are a double-edged weapon that strikes at the limiting party as hard. And in reality, the only impact Forex investors can have is the emergence of new factors that require foreign exchange market participants to be more attentive to the release of international economic news, and our economic calendar will help you to do so.
Impact of sanctions on Forex
The first thing to note is that Forex market today is the best platform for earning in the conditions of sanctions. However, unlike usual trading periods, when the situation is quite easy to predict, market movements in the conditions of sanctions can be called rather chaotic.
A vivid example – the stock market reacted to the growth of the refinancing rate with the growth of quotations, and after it they also grew on Forex. Although, in general, we should have expected a collapse and negative development of the situation.
What is left for traders and investors in this situation? It’s simple: when traditional methods of forecasting become irrelevant, the bet should be made on trading “on the news”.
Learn more about trading on fundamental data in this article: Trading on news: the subtleties of the process
As for such moments as the direct work of brokerage companies, everything is traditional here: the strongest survive during the crisis. Investors who panicked in the first half of the year caused the collapse of several brokerage organizations, requiring urgent payments of the invested funds.
Perhaps you will be interested in this article: Financial problems of Forex MMCIS group: bankruptcy or collapse of another pyramid?
Against this background, today, when making a choice in favor of one or another broker, investors are already more thoroughly checking its reliability. That, as a whole, positively influences development of the Forex market, creating conditions for checking the competitiveness of brokers and dealing centers already working in the Russian market. And, upon completion of the economic blockade, it may become the basis for further transition of the sphere of extra-bank currency trade from