Ruble extends losses against dollar
The Russian currency continued on Thursday to lose ground. On Friday morning USDRUB opened at 64.65, which is 100 cents above levels of closing of Tuesday, when the currency was low. EURRUB trading at 72.13, up 63 penny for it. A wary mood in the markets are forced to expect the development pressure on the Russian currency.
World stock indices carefully drop in the second half of the week, departing from the recently achieved peaks. Brent crude fell to $73.3 abruptly turned to decrease after touch 74.70 Thursday. It is noteworthy that the “fear Index” VIX in recent days turned to growth: for alertness and a weakening of the markets, most likely, is the desire of players to fix profit after a months-long rally.
The ruble should also pay attention to internal risks. Today will be a regular meeting of the CBR. Policy changes should not wait, but it is advisable to carefully examine the comments of the regulator. The Bank of Russia is quite capable of giving broad hints for a rate cut already in June. In favor of this scenario – a lower-than-expected domestic inflation. A strong ruble is continuing to restrain the growth of prices in the coming months.
The appreciation of the ruble, in our opinion, is what the Central Bank will fight. The weakening of the currency due to the careful lowering rates can spur economic growth and restrain speculative foreign investor interest in higher-yielding assets.
Still, we should not expect that the Central Bank will cut rates today from the current 7.75%. It would have caused a visible impact on the ruble, but there’s even more to the reputation of the Bank of Russia. From the regulators expect predictability, so the Central Bank prefers to first warn, and then to act.