CBR vigilant on RUB gains – Rabobank

EM Strategist at Rabobank Piotr Matys has assessed the recent appreciation of the Russian currency.

Key Quotes

“Russian officials are increasingly concerned about the rapid pace of the ruble’s appreciation. Since the beginning of the year, the ruble has firmed more than 14% against the US dollar and almost 13% vs. the euro”.

“With domestic demand still weak in Russia and economic activity mainly supported by exports, further currency gains would also undermine the competitiveness of Russian companies at the time when so many other countries are determined to increase their share of the shrinking global trade by weakening their currencies”.

“The Bank of Russia, however, pledged its commitment to a free floating exchange rate and indicated that it has no intentions to influence the ruble”.

“While the central bank seems to be reluctant to intervene directly in the FX market, it may still lower the key rate next Friday”.