The rouble real effective exchange rate (trade-weighted and adjusted for inflation (REER)) depreciated 3.3% MoM in June after a 1.1% monthly decrease in May. In real terms, RUB weakened 3.0% MoM against USD (vs. +0.8% MoM a month ago) and 4.5% MoM against EUR (+1.0% MoM over the last spring month).
The RUB REER was significantly down last month on the back of a combination of the nominal rouble weakening against major currencies (along with the global sell-off in EM currencies due to the increase in UST yields to two-year highs) and the substantial downturn in headline CPI growth. YTD, RUB REER has weakened 1.5%, although the indicator ‘terms of trade’ worsened more than that, indicating that the potential RUB equilibrium might be a weaker RUB vs. its current level and the only factor supporting RUB from more weakness is CBR interventions. Since January 2008, RUB REER has gained 13.7% despite only a minor improvement in the terms of trade.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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