MOSCOW (Sputnik) — US Democratic presidential nominee Hillary Clinton's victory would be positive for the risky assets, including the ruble, but in the medium term may mean the deterioration of relations with Russia, which will keep the ruble down.
Republican candidate Donald Trump's victory would shake up the risky asset markets and cause capital flight to the Japanese yen, the Swiss franc, the euro and gold. The weakening of the ruble, as a risky asset, would be limited as it would be compensated by Trump's complimentary comments on Russia which he made on the campaign trail.
On Tuesday, the ruble exchange rate gained some 20 kopecks against the US dollar and the euro.
Markets Preparing for Circus
Typically, the presidential election in the United States has a very limited impact on the market, but this time round it is different for several reasons, Alyona Afanasyeva of Forex Club company said.
"First of all, up to a certain point, no one had perceived Trump as a serious opponent, and now the market is just laying in the cost all the risks which it had no time to lay earlier. Secondly, the candidates are going 'neck and neck,' and if in 2000, when there was a recount for Bush-Gore, Bush's opponent was not so strong, Trump managed to secure strong support. There are fears of unrest in case of victory of one or the other candidate," Afanasyeva told Sputnik.
Finally, Trump has repeatedly stated possible election fraud, thus making it clear that he would not accept Clinton's victory. All this means one thing: the temperature is rising and in such circumstances the dollar could come under pressure initially, and the traditional safe-haven currencies, like the yen, the Swiss franc and, in part, the euro, may become winners, Afanasyeva summed up.
Almost no one doubts Clinton's victory, but a small intrigue remains, Vasily Oleynik from the ITinvest company said.
"If she [Clinton] wins with only a small margin of electoral votes, her opponent, Donald Trump, could challenge the election results, and then another circus [high volatility in exchange rates] would take place on the financial markets. Clinton needs to gain much more than the 270 electoral votes [290-300]. If Trump scores at least 271 electoral votes, it will be strongly negative for the stock markets," Oleynik said.
There are a total of 538 electors. To win, 270 votes are needed. Since the number of electors is even, a tie is also possible: 269 to 269. It is also possible that no candidate will receive enough electoral votes to win.
What to Expect From Ruble
Before the initial vote results are announced on Wednesday, November 9, no major movements on the ruble exchange rate are expected, Vladislav Antonov of Alpari company said.
"Market volatility will increase upon the first results. Clinton's victory is expected by traders, so the ruble will grow stronger. In case of Trump's victory, the ruble will fall against the dollar down to 64,70-64,95, not higher. The election results' effect in the United States will be short-lived. After the presidential elections traders will switch to OPEC's agreement to limit the production and the dynamics of oil prices," Antonov added.
The victory of either of the two major candidates in the US elections should not seriously affect the rate of the Russian currency, Igor Kovalev of InstaForex said. However, Clinton's victory looks more favorable for the ruble as a risky asset, he added. "This factor can also restore the oil, which would further support the exchange rate," Kovalev said.
Potential ruble reaction to the results of the presidential elections in the United States is not obvious, Sberbank's Tom Levinson said. The ruble rate may be more stable and less prone to fluctuations than other emerging market currencies, he said.
"Clinton's victory could support the emerging market currencies, but the prospect of keeping a tough stance against Russia suggests that in this case the ruble could count on such support to a lesser extent. If Trump wins, who is supposedly more inclined to seek more constructive US-Russian relations, the ruble may demonstrate more positive momentum than comparable currencies," Levinson added.
The US presidential elections are being held on Tuesday, November 8. Clinton and Trump are regarded as the main contenders for the post of the new US leader.