The ruble is losing ground against the background of outflow of funds from emerging markets

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The ruble yesterday lost its position since the beginning of the day. To resist against the Euro helped him a significant weakening of the latter on the background of the ECB meeting. The result EURRUB fell 3 cents to 75.88 while USDRUB rose 35 cents to 62.72.
The ruble is affected by the outflow of funds from emerging markets, despite a slight decrease in the yield of US Treasury bonds and rising stock markets.
Today on the agenda of Russian markets meeting the CBR. The weakening of the ruble, coupled with a surge in volatility in the foreign exchange market and stock markets will almost certainly force the Central Bank to keep rates unchanged and to produce more careful review in relation to further steps to reduce these. It is likely that the tone of the comments to be more hawkish because of the threat of returning inflation to the target of 4% from current levels to 2.4% by the end of March.
Meanwhile, the Euro “fell out” of the trading range of the past three months against the dollar after the ECB President acknowledged that the European economy is unlikely to maintain the growth demonstrated last year. Although he tried to assure that the Central Bank will gradually reduce the incentives and soon will curtail the asset purchase program, market participants felt that it was a softer tone in comparison with expectations.
In the result, the EURUSD fell below 1.21, down 0.8% on the day and extending the losses of the last seven trading days up to 2.5%.
Alexander Kuptsikevich,
Financial analyst,