Split bets on the CBR decision on Friday – TDS

Strategists at TD Securities see the consensus remains pretty divided on the upcoming CBR’s interest rate decision due on Friday.

Key Quotes

“We think it is something of a 50/50 bet as to whether or not the CBR cuts its Key rate, currently 10%, on Friday. If they do cut then we expect 25bps”.

“The statement of last Board meeting was very cautious, saying that the likelihood of any rate cut in H1 had fallen This more cautious stance was largely driven by concerns about the possible impact on the ruble of a faster pace of Fed rate hikes and also, perhaps, the impact of FX purchases by the Finance Ministry. However, in spite of a Fed rate hike and FX purchases, the ruble has performed well”.

“We think whether the CBR cut on not on Friday will have limited impact on the ruble. However, given the current level of oil prices we think that the ruble looks rich relative to the US dollar. Therefore, although we remain positive on oil, we recommend closing out long ruble positions”.