USD/RUB likely to trade around 60 by end-2017 – Lloyds bank
Source: FxWire Pro - Commentary / 12 Sep 2017 19:11:10 Eastern Standard Time
The USD/RUB pair retraced most of its gains since June to a two-month low of 56.78 in the past month. Higher crude oil prices put downward pressure on the pair. There are a few factors that would leave the currency pair well supported. Firstly, foreign investors have evident reasons to avoid Russian assets because of geopolitical risk.
During financial market stress this might weigh heavily on the ruble. Secondly, Russia’s finance ministry, which intervenes to push USD/RUB higher, benefits from a combination of higher oil prices and the weaker exchange rate, noted Lloyds Bank in a research report. Thus, there is a clear incentive for policymakers to manage USD/RUB higher. Lastly, the Russian central bank is expected to maintain its current easing cycle as Russia’s headline consumer price inflation continues to decelerate. Lower interest rates in the nation would make the ruble less attractive from a carry perspective.
“We forecast USD/RUB to end the year at 60”, added Lloyds Bank.
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