USD/RUB likely to stay in 65-67 range in near-term, to gradually fall towards 62 by 2020 - Commerzbank
Source: FxWire Pro - Commentary / 09 Apr 2019 15:35:06 America/New_York
The Russian ruble is set to be on a moderate appreciation path. According to a Commerzbank research report, the USD/RUB pair is expected to stay in the 65 to 67 range in the near-term and gradually fall towards 62 by 2020 as the Central Bank of Russia continues to keep the interest rate high.
There might still be a risk scenario where the U.S. utilizes the new DASKA (Defending American Security from Kremlin Aggression Act) and imposes harsh sanctions on Russia, which would drive USD/RUB to possibly 70. However, there is only a slight likelihood of such a scenario. The base-case is for only moderate sanctions to follow, within the range already discounted by the market, said Commerzbank.
U.S. President Trump does not seem to be in a hurry to impose new sanctions – under the new law, he has considerable discretion on the timing and scope of sanctions.
“If we assume that CBR will hold its policy rate at 7.75% for most of this year, and only gradually lower rates by the end of the year, the real interest rate will remain positive and USD-RUB would drift lower by the end of this year. An upward trend in the oil price will bolster this move”, added Commerzbank.© FxWire Pro 2020. All rights reserved. The FxWire Pro content received through this service is the intellectual property of FxWire Pro or its third party suppliers. Republication or redistribution of content provided by FxWire Pro is expressly prohibited without the prior written consent of FxWire Pro, except for personal and non-commercial use. Neither FxWire Pro nor its third party suppliers shall be liable for any errors, omissions or delays in content, or for any actions taken in reliance thereon.