Forex rumors are a thing which some traders learn to ignore while others actively seek and try to exploit. Often, it’s not even important whether or not a rumor actually transpires, it has enough of an effect on the market that you can make a decent amount of pips of it just because of its influence on other traders.
One of the biggest rumors which is now circulating in traders’ circles is that Russia is going to be dumping a high amount of dollars into the market place.
The “logic” behind this rumor is that Russia is stark-raving-mad at the United States for condemning Russia’s invasion of Georgia. As you know, Russia has practically taken half of Georgia, and has still not withdrawn its troops back to its own borders.
Although the United States did nothing to really help the Georgians (who didn’t have a fighting chance against the Russian army), it did voice its disapproval of Russia’s actions.
Some traders speculate that Russia will react by flooding the market with US dollars, effectively driving the price down. Whether this is true or not remains to be seen, but by doing so, Russia will also be harming itself.
The reason is that Russia has a lot of USD reserves, whether in the form of cash or in debt she’s owed. If the dollar’s value falls, so does the value of these reserves, so it remains to be seen whether or not this rumor will materialize.
I happen to think that it won’t, at least not in the current state of affairs, but it’s something that bears watching.
