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Rouble REER weakened in September, declining 0.4%

 
08.10.2012

Technically, given the depreciation of the rouble nominal effective exchange rate in September (-0.6% MoM due to the stronger effect of the weakening RUB against the EUR (-2.2% MoM) vs. the strengthening of the rouble against the dollar (+1.4% MoM)), we believe that accelerated CPI in September to 0.6% MoM and 6.6% YoY (from 0.1% MoM and 5.9% YoY in August) prevented heavier weakening of the REER last month. We think that further acceleration in consumer prices growth (to 7.3% Dec/Dec) in Russia might help the REER during the last few months of the year and balance anticipated RUB weakness.

In our view, shrinking CA, due to lower oil prices in the coming months, is set to limit the possibility of any RUB appreciation in REER terms, while the CPI’s upwards trend would be supportive. Hence, we expect the rouble to lose value against both the dollar and the currency basket, falling to 34.12 and 37.50, respectively, by the end of the year. 

Technically, given the depreciation of the rouble nominal effective exchange rate in September (-0.6% MoM due to the stronger effect of the weakening RUB against the EUR (-2.2% MoM) vs. the strengthening of the rouble against the dollar (+1.4% MoM)), we believe that accelerated CPI in September to 0.6% MoM and 6.6% YoY (from 0.1% MoM and 5.9% YoY in August) prevented heavier weakening of the REER last month. We think that further acceleration in consumer prices growth (to 7.3% Dec/Dec) in Russia might help the REER during the last few months of the year and balance anticipated RUB weakness.

In our view, shrinking CA, due to lower oil prices in the coming months, is set to limit the possibility of any RUB appreciation in REER terms, while the CPI’s upwards trend would be supportive. Hence, we expect the rouble to lose value against both the dollar and the currency basket, falling to 34.12 and 37.50, respectively, by the end of the year. 

Maxim Oreshkin, Daria Isakova
VTB Capital analyst

Tags:
ruble, euro, CPI, Russia

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