USD/RUB to make a run at 73.25 next week barring new Russia's military ambitions – ING

There will be a lot of focus today on the Central Bank of Russia's (CBR) monetary policy decision. Economists at ING doubt that the CBR meeting will make much material difference to the rouble. They expect USD/RUB to slide towards 73.25 next week in absence of new geopolitical tensions.

100bp rate hike looks discounted

“We expect a 100bp rate hike, upward revisions to CPI and hawkish guidance which could leave open the door for another 50-100bp rate hike. On another day, this could all be very positive for the rouble. However, tensions surrounding Russia's military ambitions will probably leave investors reluctant to hold long RUB positions over the weekend.”

 “Some are also arguing that the CBR could today announce a resumption of the FX buying programme for the budget rule. However, a bull case could develop for the rouble into next week should the CBR choose to delay the FX buying programme until a much clearer geopolitical picture has emerged. And it would not be a surprise for the RUB to strengthen next week as some speculated over the departure of Russian forces from Belarus were military exercises to end on schedule 20 Feb.”

“Barring any major new developments this weekend, USD/RUB could make a run at 73.25 next week.”