Hedge Funds Turn Bullish on Russia Ruble for First Time in 2016

Hedge funds turned bullish on the Russian ruble for the first time in five weeks after the currency tumbled to a record, surpassing the previous all-time low it touched during the financial turmoil that gripped Russian markets in December 2014.

Hedge funds and large speculators were net long 651 futures contracts on the currency in the week ended Jan. 19, according to U.S. Commodity Futures Trading Commission data published Friday in New York. That compares with net short positions of 657 contracts in the prior five trading days. Speculators turned bullish on the ruble as the currency tumbled with oil this month in one of the biggest retreats in emerging markets.

“This is more likely profit taking after a huge currency slump rather than the turnaround in sentiment,” Juan Prada, a foreign-exchange strategist at Barclays Plc, said by phone from New York. “The ruble is highly correlated with oil, and if we see oil resuming its decline, we might probably see bearish sentiment regarding the ruble again.”

Brent crude, the grade traders use to price Russia’s main export blend, rose 10 percent on Friday in the biggest one-day rally since August. Oil is still down 14 percent in 2016. The ruble rose 5.9 percent to 78.024 on Friday, narrowing its retreat this year to 6.4 percent.