Russian rouble – November report
RUB (Russian rouble) Current Rate: RUB 70.3999/£1; RUB 44.9294 /US$1
Russia’s fortunes have been on shaky ground since the start of the Ukraine crisis. This, combined with the resulting economic sanctions, has pushed the rouble to its tipping point, culminating in a crash in the first week of November that saw the Russian currency fall by more than 10% in 48 hours.
Another key catalyst for the crash was the Central Bank of Russia (CBR)’s move towards a free-floating currency. Central bank interventions will now be limited to cases where it is required to “break panic, speculative demand”. CBR Governor Elvira Nabiullina denied that the fall was related to ‘economic fundamentals’. This was followed by the abandonment of the dual-currency trading band that it had previously adopted.
The rouble has also lost more than a quarter of its value against the US dollar this year. Although the move to lessen central bank interventions should, in theory, strengthen the integrity of the rouble’s performance in markets, it may be a case of ‘too little, too late’ for a country that is facing a lack of confidence from its peers, due to its involvement in the Ukraine crisis.
Meanwhile, falling oil prices increased Russia’s woes, but plans made with China for trade settlements in roubles and yuan may help to alleviate this problem. Although the outlook for the Russian rouble has been shaken mightily in November, the central bank’s determination to keep its eye on a 2015 free float may help to strengthen the currency against that of peers like the UK, particularly if sterling continues its lacklustre run.
Rate forecasts for GBP/RUB:
Time Length Rate
1 month 67.2000
3 months 66.4000
6 months 66.6848
Forecasts accurate from 25 November 2014. Data taken from Reuters’ poll.
Data sourced from GBP/USD and USD/RUB cross.
