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Hello, fellow traders!
At the beginning of the new year to sum up the past financial period, and therefore the Central Bank has published statistics on foreign exchange reserve, according to which, the traders of the Bank "merged" in the Forex market is $9.5 billion it drew the attention of journalists finanz.ru. Some may be surprised that the subsequent report of high-profile resignations, but the result is 2017, the year was also negative, the loss amounted to $4.5 billion according to research of the same portal.
Statistics suggests various conspiracy theories: from sabotage to the fall of professionalism in the ranks of the traders Bank of Russia or their actions in the "private interests". In fact, the issue of "plum" easy to understand reports on gold reserves and the transaction is available to everyone, the numbers are reliable, given the high and important status of the organization, its international position and embeddedness in the global system of Finance. And causes loss is not the lack of talent traders. Let's see: what actually led to such huge losses?
the Strategy of the Central Bank of Russia
Before discussing the course of traders ' transactions of the Central Bank, should investigate the specifics of the strategies of the main financial institutions of the country.
Bank of first-line acts in the interests of state policy, having commercial earnings. The main objective is the accumulation of "safety cushion", which plays the role of the damper with external shocks and support domestic economic reforms.
the Government and lawmakers carry on certain economic line, which a financial institution is required to accept and consider answering your own strategy of monetary policy. Ultimately, any actions and plans of the state affect the formation of foreign exchange reserves.
the Gold reserves of Russia — what is wrong with them in 2017-2018?
Business media Russia in 2017 year and since the summer of 2018, the year criticized the Bank of Russia as "unjustified" the loss of gold reserves during the period of stable economy. Claims the logical: the Central Bank can and should lose foreign currency and gold in the economic crisis, but in the period the budget surplus required to support the continuous growth of foreign assets.
Transactions of the Central Bank in 2017 looked a little strange to the layman – the press faulted the purchase of U.S. dollars in the first and second quarters of 2017, the year (19.5 billion euros converted to USD). Holding the position lasted until the end of 2018, until a reverse transition by the Bank of Russia in Euro, by converting the purchased dollars.
the following graph of EURUSD around the marked points of entry and exit from this position. Euro sold at the "bad" price 2017, however, the dollar bought at the bottom in 2018. This changes the pattern of loss. If we calculate the relative drawdown, given the volume of gold reserves of more than $460 billion in 2017, the year it was 1%.
However, the press is silent about the cost of buying euros in 2016-m to year: look carefully at the graph – the Central Bank closed a previous long EURUSD that was opened "again" in 2018, in fact, without loss, since the transactions occurred in one large horizontal price corridor:
the Central Bank explains the rebalancing of the positions of the departure from the negative yield of government Treasury bonds of the European Union with the subsequent purchase of American securities, which, unlike the first, showed a peak yield of 3%. The Bank of Russia reached the highest levels of coupon payments, starting with the sale of bonds the fed in the fall of 2018, as you can see in the chart below.
Thus, the overall actual result of the transaction – balancing of currency EUR to USD "to zero" with the maximum profit earned on the bonds.
At the end of 2018, the year the business press blamed the Central Bank of Russia investments in the yuan and gold. However, the last asset is not so often remembered after the Christmas rally that has restored the rate of 80% up to 2017.
let's Dwell on the gold. Since 2012, the Central Bank arranges the purchase of gold, increasing the volume. In 2018 was purchased especially large batch of metal and 270 tonnes. To understand the size of the deals, citing the example of Turkey, took second place for purchases of this metal, which has expanded the inventory of "only" 20 tons.
If the Bank of Russia spent the bulk of transactions in the middle of the year, it has managed to benefit enormously, gaining 18.5% share of gold reserves in the precious metal. Given the negative forecasts of the world economy, the profits from such investments will continue to grow.
the Losses in the yuan there is nothing to justify – in composition of foreign exchange reserves, the Chinese currency has taken a share of 14.7%, the purchases occurred at the time of the permanent weakening of the side of the people's Bank of China, the national currency dropped by 7.5%, which led to a current loss of $5 billion the chart below illustrates the decline of the yuan to the U.S. dollar, from 0.16 to 0.15$:
the Central Bank explains the deal with diversification of assets, but accurately it is possible to assume that the purchase of the Chinese currency has more to do with politics what tactics of accumulation and on this position we can talk in a year.
How to trade on Forex the Central Bank of Russia?
Currency trader the Central Bank of the Russian Federation Renat Valeev revealed some "secrets" of trading the Bank of Russia on the Forex market. To approve the now former employee, the main Bank is "late" trades are a priori, because:
has a long-term plan, in shares exchange and gold relative to total gold reserves; Rebalancing the portfolio is at significant variance percentages, i.e. always on high/low of the market (in the opposite direction), and Each trade is the bureaucratic approval procedure, which is preceded by a detailed analysis.
the Bank of Russia thinks a considerable time scale and adhere to the plans, which are designed for a period of one year to five years, so annual reports will only show the intermediate result.
to become More familiar with the strategy of trading of the Central Bank on the pages of the book Renata Valeeva — “Art of trading”. The author also actively sharing knowledge, speaking at various seminars.
Through the book it becomes clear the mechanism of transactions of the Bank of Russia — traders “on top of” lower plan percentage currency portfolio. For example, in 2014, the crisis year, it looked like this:
EUR — 42.5 %
USD — 42 %
GBP — 9 %
CAD — 5 %
AUD — 1.5 %
the Daily work of traders was the transactions leading to the above maintaining balance, i.e. the rise in the Euro, leading to an increase of the dollar to 43%, led to the dumping of U.S. currency from the reserves. Thus, all of the transactions were counter-trend in nature due to the specifics of the task of balancing the gold reserves.
a Measure of the activity of the Central Bank of Russia, as stated in the beginning of the article, setting the volume of gold reserves, a point of reference for which can be considered the 2015 (post-crisis) year. The following graph shows the increase in gold and currency to $464 billion.
Reading materials that focus on the numbers "huge" losses, always compare this volume with the given information and will see drain traders of the Central Bank in the Forex does not exceed 2%. This is a great indicator of money management given the clear trend to increase the total inventory.
With respect, Alexey Vergunov
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