30 Jan 2015
USD/RUB to climb over 75 in a month – Danske
FXStreet (Barcelona) - The Danske Bank Research Team, comments on Russian Central Bank decision to cut interest rates by 200bp, and further expects RUB to attain an equilibrium price of 75 with USD.
Key Quotes
“Today (30 January 2015) Russia’s central bank unexpectedly cut its key rate to 15% from 17% p.a., while consensus expected the rate to stay unchanged.”
“The main reason given by the central bank for the cut was that the previous hike by 650bp in December 2014 calmed inflation and depreciation expectations.”
“The central bank expects a further decrease in the CPI due to falling economic activity.”
“We expect that the rouble will be actively trying to what we estimate as its equilibrium price of 75 against the USD, given the current oil price.”
“New sanctions and the escalation of fighting in Eastern Ukraine will be adding a ‘fear premium’ to that level.”
“We welcome the decision to cut, as last year’s aggressive monetary policy has caused a massive monetary contraction and is likely to send the Russian economy into deep recession this year (we expect GDP to fall -7.9%), with a further -0.8% y/y fall in 2016.”
“Yet, in current conditions 200bp is still a small cut to help lending growth and support economic activity.”
“We expect CPI to rise to 20% y/y in H1 15, which leaves no space for further monetary easing. The next meeting of the central bank on the key rate is scheduled for 13 March 2015.”
Key Quotes
“Today (30 January 2015) Russia’s central bank unexpectedly cut its key rate to 15% from 17% p.a., while consensus expected the rate to stay unchanged.”
“The main reason given by the central bank for the cut was that the previous hike by 650bp in December 2014 calmed inflation and depreciation expectations.”
“The central bank expects a further decrease in the CPI due to falling economic activity.”
“We expect that the rouble will be actively trying to what we estimate as its equilibrium price of 75 against the USD, given the current oil price.”
“New sanctions and the escalation of fighting in Eastern Ukraine will be adding a ‘fear premium’ to that level.”
“We welcome the decision to cut, as last year’s aggressive monetary policy has caused a massive monetary contraction and is likely to send the Russian economy into deep recession this year (we expect GDP to fall -7.9%), with a further -0.8% y/y fall in 2016.”
“Yet, in current conditions 200bp is still a small cut to help lending growth and support economic activity.”
“We expect CPI to rise to 20% y/y in H1 15, which leaves no space for further monetary easing. The next meeting of the central bank on the key rate is scheduled for 13 March 2015.”