SPDR S&P Russia ETF (NYSEARCA:RBL) Losses More Than 30% In A Month


Dallas, Texas 12/17/2014 (FINANCIALSTRENDS) – SPDR S&P Russia ETF (NYSEARCA:RBL) seeks to provide investment results that correspond to the S&P® Russia Capped BMI Index’s performance. While the ETF gained 0.71% on Tuesday, it has lost more than 30% in last one month.

The Russian ETFs are reacting to volatility and uncertainty surrounding the country’s economy, which the Russian government expects to hit recession early next year. The falling crude oil prices further pressure the economy as oil exports accounts for 60% of Russia’s total exports. The economy is already facing the burden of global sanctions implemented by the U.S. and EU in response to the Ukraine crisis.

Government Measures

In a surprising move, the Russian Central Bank steeply increased interest rates to 17% from 10.5% to save free-fall of ruble against the U.S. dollar. However, the measure didn’t make any magic as the ruble lost more than 13% on Tuesday and fell to as low as 78 per dollar. This marked the steepest intraday fall since the crisis in 1998. However, it marked strong recovery from those levels and currently it is trading at 66.43 per dollar. The ruble is devalued more than 55% year-to-date.

Economist Dr. Mikhail Melnik, of Southern Polytechnic State University, noted that rate hikes would not offer any fundamental solution and could also prove counterproductive. He also pointed at the damaging effects of exchange rates given the large imports of finished goods in Russia. Melnik explained that the downfall in ruble will not only make imported products costly and trigger inflation, but will also impact the most vulnerable population segments.

About SPDR S&P Russia ETF

SPDR S&P Russia ETF (NYSEARCA:RBL) is currently sitting at all-time lows reflecting the downfall in 48 publicly traded Russian companies that it represents. Its holding is diversified across 10 sectors with Gazprom OAO, Lukoil and MMC Norilsk Nickel making up more than 36% of total holdings.