As the Russian Central Bank (CBR) convenes today, economists at Commerzbank delve into the prospective trajectory of the Rouble (RUB) in anticipation of the decision.
Stagnant Main Rate:
Forecasts unanimously suggest that there will be no alteration to the Russian Central Bank’s primary interest rate, currently set at 16%. This decision, while significant, is not expected to directly impact the ‘technical fix’ USD/RUB or EUR/RUB exchange rates, as these are primarily influenced by the dynamics of demand and supply in energy and other commodity trades.
Long-Term Rouble Projections:
In light of prevailing conditions, Commerzbank foresees a gradual depreciation of the Rouble over an extended period. The potential influence of interest rates on exchange rates is minimal in this context, as capital flows typically respond to interest rate differentials. However, due to the imposition of sanctions, such adjustments cannot occur in US Dollars or Euros within the Russian economy.
In essence, while the CBR’s rate decision holds significance for domestic monetary policy, its direct impact on exchange rates remains tempered by broader economic factors, leading to a forecasted weakening of the Rouble over time.
