1 May 2015
CBR vigilant on RUB and inflation – Rabobank
FXStreet (Edinburgh) - Strategist Piotr Matys at Rabobank sees the central bank easing further in the medium term, paying attention to the inflation figures and the recent RUB appreciation.
Key Quotes
“The rapid pace of RUB appreciation is a crucial driving factor for the CBR’s monetary policy”.
“While our baseline scenario assumes that the central bank will continue to cut rates by at least 100bps per meeting this year –with inflation seen peaking at around 17% YoY in Q2 and resuming downside trend in 2H– Governor Nabiullina may opt for a large move to deter market players from betting on further RUB gains”.
“The ruble’s truly remarkable rally seems overdone compared to its fundamentals”.
“Perhaps more importantly, the central bank may take more active steps to prevent (or at least to slow down) further gains with the RUB equilibrium level seen close to 50 against the USD”.
“We will probably hear regular verbal intervention from officials who will try to discourage RUB bulls”.
“Given that the conflict in eastern Ukraine remains unsolved, we continue to argue that betting on Russian assets remains a risky strategy and we prefer Polish and Hungarian assets”.
Key Quotes
“The rapid pace of RUB appreciation is a crucial driving factor for the CBR’s monetary policy”.
“While our baseline scenario assumes that the central bank will continue to cut rates by at least 100bps per meeting this year –with inflation seen peaking at around 17% YoY in Q2 and resuming downside trend in 2H– Governor Nabiullina may opt for a large move to deter market players from betting on further RUB gains”.
“The ruble’s truly remarkable rally seems overdone compared to its fundamentals”.
“Perhaps more importantly, the central bank may take more active steps to prevent (or at least to slow down) further gains with the RUB equilibrium level seen close to 50 against the USD”.
“We will probably hear regular verbal intervention from officials who will try to discourage RUB bulls”.
“Given that the conflict in eastern Ukraine remains unsolved, we continue to argue that betting on Russian assets remains a risky strategy and we prefer Polish and Hungarian assets”.