According to analysts from Danske Bank, the Russian ruble could drop further in the short-term against the US dollar but they forecast USD/RUB at 70.00 in three months and at 69.00 in six.
“In Russia, the economy can weather the storm, as inflation is low, and even after the 20-30% move in the rouble we are unlikely to see double-digit CPI. Over the past month(s), we have seen a marked sell-off in many high beta EM FX crosses like TRY, ZAR, BRL, IDR. We no longer believe there is valuation support for the RUB. As of recently, sanction risks have been priced in to RUB spot (Belarus and Afghanistan related stories) but we expect these to fade, given time. Near term, we do not expect a shift in oil prices but the likely direction is a mild drift up.”
“The possibility of more RUB strength lies with upside for oil prices, fading sanction risks and stronger-than-expected global demand, and we have faded a bit of the expected ruble upside across all tenors in the forecast profile.”
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