USD/RUB expected to drop to 58.30 in the medium term – Danske Bank
|Vladimir Miklashevsky, Senior Strategist at Danske Bank, keeps the constructive tone for the Russian currency in the medium term horizon.
Key Quotes
“Russia’s central bank (CBR) kept the key rate unchanged at 7.25% as we expected, along with Bloomberg and Reuters. Inflation stayed unchanged at 2.4% y/y in April, while the CBR preferred to stop rate cuts on increased volatility due to the new anti-Russia sanctions by the US in April. We expect the CBR to lower the key rate to 6.50% by end-2018 (6.25% previously) and to 5.75% by the end-2019 (5.50% previously). However, we expect the CBR’s monetary easing path to be very gradual throughout 2018-19”.
“Given persisting geopolitical risks as a wave of new anti-Russia sanctions could arise anytime, we raise our view on the USD/RUB increasing demanded geopolitical premium. Our new USD/RUB forecasts have been raised to 61.50 in 1M (previously 59.50), 60.10 in 3M (57.30), 58.30 in 6M (56.40) and 55.70 in 12M (54.90). As we remain positive about the crude price and Russia’s macro fundamentals in the long term, we see macro fundamentals supporting the RUB, keeping a geopolitical premium”.
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.