The ruble depreciation will accelerate inflation to fall

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In the Russian currency market – a slight lull, which looks very fragile, insecure and short. So, yesterday afternoon GMT the ruble was down 0.3% from the opening to 68,07 against the dollar, slightly strengthening to 67,70 during Putin’s speech. Against the Euro the ruble remained virtually unchanged, dropping from the opening only by 0.06% to 79,40 rubles per Euro, but remaining under pressure, despite the fact that, as we know, the CBR, according to his own announcement last week, suspended the daily purchase of foreign currency. As of 12:30 GMT today, the ruble is trading at 68,17 against the dollar and 79,66 against the Euro, moving away from dangerous levels 70/$ 80/€, respectively.
Despite the continuing high “produce” season, for the third consecutive week, the weekly inflation rate in Russia is fixed at 0.1% (devaluation will never go unnoticed). On the current Monday in annual terms, it has exceeded 3%, while year-end inflation for another four months! Last week the official forecast of the Ministry of economy, growth of consumer prices was modest, but without delay raised from 3.1% to 3.4%, and this is just the beginning.
By the end of September, the official annual inflation rate may rise to 3.4-3.6% and for the year exceed 4%. Informal inflation expectations until the end of the current year among importers and retailers is assessed at least 6.5%.
All this increases the chances that at the next meeting, on 14 September, the Central Bank for the first time since December 2014, will raise the key rate. We adhere to popular among stock market analysts of the opinion that we are in any case not avoid the growth of the key rate from 7.25% to 7.5% by the end of the year.
Speaking about the situation with the currencies of developing markets, the spot market, the Chinese yuan opened today at around 6,8200 compared to the open environment at the level 6,8090 per dollar, and at noon recorded at around 6,8327, 108 points lower than in previous post-market, and 0.10% lower than the average for the previous trading session. Chinese traders reported that the current weakness is not the result of the actions of the people’s Bank, but only follows the purchases of the dollar by corporate clients, which took spot onshore yuan even lower.
In turn, the Central Bank of Turkey has taken steps, freezing part of the previously launched emergency support to national Bank in connection with a speculative attack on the Lira in the middle of the month, reviving concerns of investors in relation to financial stability in the country.
Meanwhile, Moody’s also contributed to the growth of optimism in Turkey, lowering the ratings of 18 Turkish banks from the list of extra support Erdogan, fearing that they will face increasing difficulties in refinancing the loans in foreign currency.
Vladimir Rojankovski,
“International financial center”