1 May 2015
RUB could depreciate further in the longer run – Danske Bank
FXStreet (Edinburgh) - In the opinion of analysts at Danske Bank, the Russian currency could grind lower in the long term.
Key Quotes
“The main reason given by the central bank for the cut was ‘lower inflation risks and persistent risks of considerable economy cooling’ which reinforces the direction of the monetary policy taken after CBR’s U-turn in January 2015”.
“The recent rouble appreciation is curbing inflation clearly under 17% y/y. The CBR expects annual inflation to decrease to under 8% in 12 months which keeps the door open for significant rate cuts in 2015. We expect the key rate to drop under 9% by the end 2015. However, we see CBR’s inflation target at 4% for 2017 as unrealistic”.
“The new trend in monetary policy is positive for the economy and for financial markets. However, the easing effect will not be seen in the real economy until 2016 at the earliest even if we do not see geopolitical woes coming into the main picture”.
“We expect the rouble to weaken moderately in the long-run gradually pricing in further rate cuts. We estimate the rate against the USD to stay around 61 in the short term”.
Key Quotes
“The main reason given by the central bank for the cut was ‘lower inflation risks and persistent risks of considerable economy cooling’ which reinforces the direction of the monetary policy taken after CBR’s U-turn in January 2015”.
“The recent rouble appreciation is curbing inflation clearly under 17% y/y. The CBR expects annual inflation to decrease to under 8% in 12 months which keeps the door open for significant rate cuts in 2015. We expect the key rate to drop under 9% by the end 2015. However, we see CBR’s inflation target at 4% for 2017 as unrealistic”.
“The new trend in monetary policy is positive for the economy and for financial markets. However, the easing effect will not be seen in the real economy until 2016 at the earliest even if we do not see geopolitical woes coming into the main picture”.
“We expect the rouble to weaken moderately in the long-run gradually pricing in further rate cuts. We estimate the rate against the USD to stay around 61 in the short term”.