USD/RUB likely to trade around 59 by end-2017, says Lloyds bank
Source: FxWire Pro - Commentary / 19 Jul 2017 19:09:48 Eastern Standard Time
Firmer crude oil prices have not translated into a lower USD/RUB in recent weeks, noted Lloyds Bank in a research report. Looking ahead, a combination of looser monetary policy and the requirement to rebuild both foreign exchange and central government reserves will push the USD/RUB pair higher, even if crude oil prices eventually recover, stated Lloyds Bank.
The Russian finance ministry affirmed in June that it would be making FX purchases to the tune of USD 200 million to USD 300 million a month in 2017. The Russian central bank also eased its monetary policy by an additional 25 basis point rate cut in June to 9 percent.
Guidance from the central bank shows that the “neutral” interest rate for the economy lies between 2 percent and 3 percent. Thus, the central bank is expected to further ease its policy as the year progresses.
“Additionally, renewed EU sanctions against Russia this month for its involvement in Ukraine acted as another key weight on the currency”, added Lloyds Bank.
According to Lloyds Bank, the USD/RUB pair is expected to trade around 59 by the end of this year and around 62.1 by the end of next year.
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