19 Dec 2014
Russian economy is likely to be sent into deeper recession in 2015 – Danske
FXStreet (Barcelona) - The Danske Bank Research Team anticipates the monetary contraction to send the Russian economy into a deep recession in 2015.
Key Quotes
“The central bank's credibility is currently weak. To stabilise the rouble, the central bank has squeezed rouble liquidity, sending interbank rates into the sky as the overnight rate hit 50% and the one-month implied yield in FX swaps increased to 40%.”
“We believe the squeeze will continue to keep rouble liquidity low, at least over the New Year and Christmas holidays in Russia, to make Russian consumers happy with a stronger rouble. Overnight interest rates soared to 50% on 18 December. At the press conference on 18 December, Vladimir Putin said tight liquidity was needed to stabilise the rouble but only temporarily.”
“Thus, a terrible start to the week for the Russian rouble has stabilised over the past two days. However, the (temporary?) stabilisation of the rouble has not been for free. We expect monetary contraction to send the economy into a deep recession in 2015.”
Key Quotes
“The central bank's credibility is currently weak. To stabilise the rouble, the central bank has squeezed rouble liquidity, sending interbank rates into the sky as the overnight rate hit 50% and the one-month implied yield in FX swaps increased to 40%.”
“We believe the squeeze will continue to keep rouble liquidity low, at least over the New Year and Christmas holidays in Russia, to make Russian consumers happy with a stronger rouble. Overnight interest rates soared to 50% on 18 December. At the press conference on 18 December, Vladimir Putin said tight liquidity was needed to stabilise the rouble but only temporarily.”
“Thus, a terrible start to the week for the Russian rouble has stabilised over the past two days. However, the (temporary?) stabilisation of the rouble has not been for free. We expect monetary contraction to send the economy into a deep recession in 2015.”