Russia ETF Could Stumble on Strengthening Ruble

Russia’s economy is rebounding and the overall outlook for growth is improving, but a strengthening ruble could be a hiccup for the economy and its ETF.

Growth prospects for the next year are looking ripe for Russia, but the country must overcome the ruble’s highs against the euro. Darya Korsunskaya and Yelena Fabrichnaya for Reuters report that the appreciation of the rouble does allow for lower inflation and more trust in the banking system, despite the dangerous levels

On the plus side, next year’s growth could top 2% if oil prices stay high. Greater revenues from taxes on energy companies could also ensure this year’s budget deficit is smaller than expected, according to the Finance Minister. Itar Tass for Business Standard reports that serious work is needed at the business and state level. Even if negative aspects of oil’s growth take over, Russia’s economy still stands in a good position, analysts note.

• Market Vectors Russia (NYSEArca: RSX): up 144.1% year-to-date

• CurrencyShares Russian Rouble (NYSEArca: XRU): up 6.2% year-to-date

Read the disclaimer, as Tom Lydon is a board member of Rydex Funds.