The ruble is waiting for the target Bank of Russia key rate
Despite the risks of falling demand for oil because of the trade war, the United States and China, the Bank of Russia on Friday with a high probability will reduce the key rate from 7.25% to 7 %. Inflation is slowing and economic and industrial growth remains weak. Perhaps the Chairman of the Central Bank of Russia Elvira Nabiullina will make any hint to the reduction of the key rate to 6.75 % in December 2019.
Recall, the target of the Bank of Russia on the key rate – 6-7%. The reduction of the key rate leads to a drop in interest rates on deposits, which increases the interest to the Russian dividend stocks, and also likely to spur demand for the new issue of national OFZ. With the opening of the Deposit the delay is not worth it, rates are likely to decline to the end of the year.
We believe that the expected decision to reduce the key rate is already incorporated in the exchange rate. By mid-September we expect the dollar/ruble in the range of 66-68 RUB and Euro/ruble – in the range of 72-74 RUB.
“Information-analytical center “Alpari”