RUB stays under pressure – Danske Bank

Vladimir Miklashevsky, Senior Economist at Danske Bank, believes the Russian currency remains under pressure for the time being.

Key Quotes

“On 3 February, Russia’s central bank (the CBR) kept its key rate at 10.0%, in line with consensus and our expectation. Yet, the general tone of the CBR’s statement has turned more hawkish as the Ministry of Finance (Minfin) started its FX operation mechanism. The central bank stated that its ability to cut its key rate in H1 17 has diminished. We still expect the CBR to start cutting rates in Q2 17, while we expect the key rate to reach 8.0%”.

“While carry-trades and improved EM sentiment on a less hawkish than expected Fed are supporting the RUB, Russia’s economic authorities seems to be unhappy with the excessive rally in RUB, intervening both verbally and through the FX operations mechanism in order to guarantee sufficient budget incomes in RUB”.

 

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