The Russian ruble has been placed under substantial pressure over the course of the last month as sanctions have been implemented by both the EU and US. However, the Central Bank of Russia has responded in kind by raising rates by 75bps over the course of the last two meetings, which along with the cooling of geopolitical tensions has enabled the ruble to somewhat recover. Sustained support from the CBR, in conjunction with subduing geopolitical tensions and a robust domestic economic recovery, leads us to believe USDRUB will recover back to the 70 handle over the next 12-months. However, risks of further sanctions and sustained ruble depreciation remain.
Author: Ima Sammani, FX Market Anlyst
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