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Ruble weakens despite liquidity constraints – KBC

Analysts at KBC Bank view the deteriorating fundamentals and falling oil prices undermining a sustainable recovery for Ruble in spite of CBR’s steps to eliminate speculators.

Key Quotes

“On Monday, the Russian central bank revoked its commitment to keep the currency within a defined trading corridor and let it float freely, with the option of intervention in case of price stability menaced by excessive fluctuations. The ruble subsequently firmed by almost 5 %.”

“Nevertheless, as soon as yesterday the Russian currency got under pressure again and weakened by 2.5 % despite liquidity constraints enforced by CBR.”

“The Russian central bank introduced a daily limit of USD 2bn for currency-swap operations, in which banks receive rubles from the regulator using USD and EUR as collateral. By this step, the CBR tried to eliminate speculative pressures on the ruble. However, deteriorating fundamentals and falling oil prices undermine ruble´s hope for a soon and sustainable recovery.”

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