The ruble: the Bank of Russia may disappoint investors
The ruble is developing an offensive, despite the wariness of the American and European markets after weak US data.
Almost as a ruler, EURRUB, there is a decrease of intraday lows and highs that brought the single currency to the region in mid-February. USDRUB is losing ground, not uniformly, but strongly, back to the levels of previous months.
Temporary support factor there may be inflation in Russia, which demonstrate a weaker growth expectations and, in this case, Express the weakness of the domestic economy, as retailers have limited price increases due to the continuing fall in real incomes.
In this situation, this is good news for the national currency. Investors are buying the ruble to convert it into bonds, hoping for a speedy growth of their yield. Traders last weeks line up for short-term Russian debt, issued by the Ministry of Finance, though sidestep paper with a long maturity.
However, flaws in this scenario abound: so you can fall into the trap. The strengthening of the ruble and a slight increase in prices can influence the policies of the Bank of Russia. Earlier, his rhetoric assumed an active rate increase, but the growth of the ruble by 5% in January allowed us to delay the tightening. Low inflation and the need to spur economic growth, ultimately, can result in further softening of rhetoric of the CBR.
Recall now that the markets lay one or even two rate hikes during 2019. Any hints on unjustified these expectations can become a serious barrier to growth of quotations of the ruble.