According to the CBR, the rouble real effective exchange rate (trade-weighted and adjusted for inflation (REER)) depreciated 0.3% MoM in November following the 0.7% MoM increase in September and bringing rouble appreciation to 3.8% YTD. The rouble weakened 0.7% MoM (in real terms) against the dollar (+3.7% YTD), but strengthened 0.1% MoM against the euro (+6.4% YTD). This compares with the MoM gains of 1.9% and 0.6%, respectively, in the previous month. Since January 2008, RUB REER has gained 13.7%.
RUB REER was merely debased in November on the back of a combination of the nominal rouble weakening against USD during the month (-1.0% MoM, according to official average rates). We suggest that the December’s acceleration in consumer prices growth might help REER this month and balance the RUB weakness that we anticipate under our baseline scenario, which implies a significant decline in Urals prices by the end of the year.
Besides, in the long run and given the implementation of inflation targeting, softer inflation will grant more chances for RUB to appreciate in nominal terms.
Dmitri Fedotkin, Mykyta Mykhaylychenko, Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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