RUB stays bullish long-term – Danske Bank

Senior Economist Vladimir Miklashevsky at Danske Bank sees the Russian currency keeping its bullish outlook in the longer run.

Key Quotes

“On 29 July, Russia’s central bank (the CBR) kept its key rate at 10.5% as consensus and we expected. The main reasons given by the central bank for keeping the key rate unchanged were the stalling decline in inflation expectations, the CBR’s comfortable stance on an upcoming economic recovery and its uncertainty about reaching its inflation target by the end of 2017 (4% y/y). We expect the total cut to be 100bp in 2016 on gradual monetary easing”.

“Russia’s currency profited from the post-Brexit emerging markets rally, diverging from the crude price. We continue to be moderately bullish on the RUB in the long term. However, the political risk and possible intensification of Western sanctions should be constantly kept in mind as possible ‘black swan’ events could prevail over fundamentals”.