- USD/RUBB drops to fresh daily lows in the 69.30 region.
- The Russian central bank (CBR) reduced rates by 100 bps.
- The CBR left the door open for extra easing in the next meetings.
The Russian ruble is picking up extra pace on Friday and is now forcing USD/RUB to trade in the area of daily lows around 69.30.
USD/RUB weaker post-CBR decision
USD/RUB is trading in the lower bound of the weekly range on Friday, coming under extra selling pressure after the CBR reduced the key rate by 100 bps to 4.5% per annum.
The central bank justified its move in response to increasing disinflationary factors, which exceeded the bank’s estimates due to the restriction measures taken amidst the coronavirus pandemic.
The central bank expects the GDP to have contracted markedly during Q2 due to the lockdown measures, while it predicts a contraction of 4%-6% of the economy during the whole of the year and a recovery in 2021 and 2022.
In addition, the unremitting bullish stance around crude oil prices lifted the European benchmark Brent crude to fresh tops in levels just shy of the $43.00 mark per barrel earlier in the session, and it has also lent extra wings to RUB.
What to look for around RUB
The persistent slowdown in domestic consumer prices have been exacerbated by the restrictions imposed to fight the coronavirus pandemic and prompted the CBR to reduce its policy rate further south from the 6%-7% band, considered as the “neutral rate” by the bank. Brent dynamics and the gradual re-opening of the economy are expected to play a relevant role in determining the price action around the ruble in the next months, while extra easing remains on the card in order to keep inflation near the 4% target.
USD/RUB levels to watch
At the moment the pair is losing 0.85% at 69.27 and a drop below 68.03 (monthly low Jun.8) would aim for 67.38 (200-day SMA) and then 6529 (monthly low Mar.3). On the flip side, the next up barrier aligns at 70.54 (monthly high Jun.15) followed by 71.40 (100-day SMA) and then 72.43 (55-day SMA).
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.