Russia: Rate decision over sanctions fears
|The ruble is trading sideways around 60 ruble and this may not last long as the USDRUB pair is under pressures. While the Russian economic data are improving, there are other geopolitical issues that may have strong consequences on the future of the Russian economy. Indeed, U.S senate has finally approved further strengthening of sanctions which would prevent Donald Trump from lifting them. Now Trump must revise this legislation which sounds contradictory knowing that his relation with Russia during his campaign are under investigation. There may be there a conflict of interest.
Some say that there is now growing risks that Russia, under the US sanctions, could face decades of low growth. Other economic fundamentals such as low oil prices, which remain below $50, are also weighing on the Russian economy. Inflation, even though declining, are still very high and should likely end up to 5% before year-end (4.4% at the moment). We believe that the Central Bank of Russia has some room for normalizing its monetary policy. In addition, the CBR needs to guarantee price stability because of sanctions will which will drive policymakers not tighten rates. As a result, key rate is then set to remain at 9%. We target 58 ruble for one dollar in the medium-term as we consider the ruble is still one good carry trade with, even though existing but limited downside risks.
Stay on top of the markets with Swissquote’s News & Analysis
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.