Russian Ruble: Likely to depreciate a bit further – Commerzbank

Dr Jörg Krämer, Chief Economist at Commerzbank, notes that the Russian economy shrank by 3.7% in 2015 and the deep recession is above all the result of the slump in crude oil prices and economic sanctions.

Key Quotes

“However, the situation stabilised of late. For 2016, we are only looking for a 1% decrease. The ruble has steadily lost in value since mid-2015. In addition to the slump in oil prices, geopolitical tensions and ongoing sanctions are proving a drag. Recently, the ruble managed to stabilise on the back of oil prices.

Statistical base effects sent the rate of inflation considerably lower in recent months. However, underlying inflation has also ebbed off a bit. This opens up scope for the central bank to cut interest rates, with its growing credibility likely to prevent any more significant ruble weakness.

However, still above-average inflation and the fragile economy will keep weighing on the ruble. We believe the currency will continue to depreciate slightly. We expect USD-RUB to trade at 70 by yearend.”