USD/RUB plunges to 3-week lows near 64.30 post-CBR

  • USD/RUB loses further ground and tests 64.30.
  • CBR cut the repo rate by 25 bps to 7.5%.
  • The CBR now sees end-of-2019 CPI at 4.2%-4.7%.

The Russian Ruble keeps appreciating vs. the greenback this week and is now dragging USD/RUB to fresh 3-week lows in the 64.30 region.

USD/RUB weaker on CBR decision

Spot has accelerated the leg lower this week after the Russian central bank (CBR) cut its key rate by 25 bps to 7.50% at today’s monetary policy meeting, matching the broad consensus.

In addition, the central bank has revised lower its end-of-year inflation forecast to the 4.2%-4.7% range (from 4.7%-5.2%) after assessing that upside risks to inflation now appear somewhat mitigated.

Furthermore, the CBR said the annual raise in consumer prices keeps losing traction, while inflation expectations among households and business price expectations remain elevated.

The CBR also sees the likeliness of further easing (via rate cuts) at one of the next meetings if domestic developments follow the bank’s forecasts, paving the way to a neutral monetary stance until mid-2020.

From its medium-term forecasts also published today, the CBR now expects the economy to expand at 1.0%-1.5% this year and 1.8%-2.3% in 2020 (baseline scenario) and 1.0%-1.5% in 2019 and 2.0%-2.5% next year in case of higher oil prices.

USD/RUB levels to watch

At the moment the pair is retreating 0.36% at 64.32 and a breakdown of 64.12 (monthly low May 22) would aim for 63.66 (monthly low Apr.23) and finally 64.39 (monthly low Mar. 20). On the other hand, the next hurdle is located at 64.71 (55-day SMA) seconded by 64.96 (100-day SMA) and then 65.59 (monthly high Jun.3).

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