USD/RUB to trade below 70 until global economy returns sustainable growth path – Nordea


The RUB lost more than 2% in one day at the end of last week and returned to levels of late May. USD/RUB is trading at 69.38 and analysts at Nordea think the short-term ruble risks are tilted to the downside amid high uncertainty around the global economy and don’t expect the pair to reach the 70 level until the global economic activity start to rebound considerably.

Key quotes

“We believe the RUB will stay near 70 versus the USD until we see a clear reason to believe the world economy is back on a sustainable growth path.”

“In normal times, the increase in the oil price above USD 42.4/bbl (base level for the Russian budget) would force the Bank of Russia to buy FX, according to the budget rule. However, a drop in the volume of oil production due to the OPEC+ deal messed up the entire mechanism. The CBR may continue to sell FX while the Ministry of Finance is trying to make up for the dwindling oil revenues. This is a RUB-positive factor.”

“Increased demand from non-residents for the Russian government bonds (OFZ) in the anticipation of 100 bp rate cut helped the RUB to get stronger in April and early May. However, the latest placement has shown that OFZ is no longer such an attractive asset for non-residents as the rate cut is already priced in. Thus, this factor will not boost the RUB further and the RUB is to trade in line with other risky assets.”

 

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.

Feed news

FXStreet Trading Signals now available!

Access to real-time signals, community and guidance now!

Latest Forex News


Latest Forex News

Editors’ Picks

EUR/USD holding above 1.18 ahead of critical US data

EUR/USD is holding onto its gains, trading above 1.18 as the dollar remains on the back foot. ADP's US job report and the ISM Non-Manufacturing PMI provide critical clues toward the Non-Farm Payrolls. Fiscal stimulus talks and geopolitics are also in play.

EUR/USD News

XAU/USD bulls unstoppable, renews life-time highs near $2040

With ‘buy the dips’ emerging as the main underlying theme behind the gold (XAU/USD) price action so far this week, the bulls flex their muscles further to record fresh all-time highs near $2040.

Gold News

GBP/USD trades around to 1.31 amid dollar weakness, ahead of data

GBP/USD is trading around 1.31, recovering as the dollar retreats. The UK government is under scrutiny for its management of the virus crisis. Services PMIs on both sides of the Atlantic are eyed.

GBP/USD News

Forex Today: Gold smashes $2,000, dollar depressed, two Non-Farm Payrolls hints eyed

Stocks, bonds, and precious metals are on the rise while the greenback is falling alongside falling yields. Investors are eyeing slow progress in fiscal stimulus talks and top-tier US figures ahead of the Non-Farm Payrolls.

Read more

WTI hits fresh two-week highs near $42.50 ahead of EIA data

WTI (futures on Nymex) extends its winning-streak into the third straight day on Wednesday, as the bulls challenge the July high of $42.51.

Oil News

Forex MAJORS

Cryptocurrencies

Signatures