USD/RUB tumbles below 66.00 post-CBR
- USD/RUB moves to the sub-66.00 area after the CBR cut rates.
- RUB ignores the sell off in crude oil prices. Brent below $60.00.
- The CBR cut the key rate by 25 bps today.
The Russian currency is extending the upside momentum in the second half of the week and is now dragging USD/RUB to fresh weekly lows in sub-66.00 levels.
USD/RUB weaker after CBR decision on rates
RUB is gathering extra steam despite the Brent crude has slipped back below the key $60.00 per barrel so far today.
In addition, the Russian central bank (CBR) reduced its key rate by 25 bps to 7.0% at today’s meeting, matching the broad consensus.
The CBR noted that the downtrend in inflation remains well in place although inflation expectations are still high. Furthermore, the central lowered its inflation forecast and now sees consumer prices ending the year between 4.0%-4.5% (from 4.2%-4.7%), closer to the bank’s target at 4.0%.
The central bank also acknowledged that the economic activity is running below expectations and that uncertainty over the global growth has increased. Against this backdrop, the CBR now sees the economy expanding 0.8%-1.3% in 2019 (from 1.0%-1.5%) and it did not rule out extra rate cuts in the upcoming meetings.
What to look for around RUB
Declining inflation and growth running below the expected path appears supportive of the easing cycle already triggered by the CBR in previous meetings and that continued today. However, trade concerns emerge as a serious threat to both the Russian economy and the Ruble despite healthy fundamentals overall, increasing demand for domestic debt (OFZ) and demand for carry-trade, all RUB-supportive.
USD/RUB levels to watch
At the moment the pair is losing 0.48% at 65.87 and a breach of 65.44 (low Aug.22) would open the door to 64.92 (200-day SMA) and finally 64.85 (monthly low Aug.5). On the upside, the next hurdle emerges at 66.35 (21-day SMA) followed by 67.10 (monthly high Aug.20) seconded by 67.14 (monthly high Sep.3) and then 69.81 (2019 high Jan.2).