In December 2014 there was almost a frenzy among the commentariat regarding the fall of the ruble toward the 60's. This time around there seemed to be an air of resignation despite the move being inexorable since last May at under 50. Go figure.
Here Alphavillein David Keohane rounds up a couple who at least seem to be cognizant that this could get serious.
84.1973 +2.7686 last after trading at 85.5739.
From FT Alphaville:
Rub falling, greater dollarisation risked, FX analysts speechless
Bank of Russia Governor Elvira Nabiullina is leaving it to the market to imagine when a ruble collapse will pose a threat to financial stability and force policy makers into action.- Bloomberg, Jan 21
So far it hasn’t, and the currency is close to its “fundamental levels,” Nabiullina said in an interview on Wednesday. Other top officials also took the crisis in their stride, with President Vladimir Putin saying that changes in the exchange rate are actually opening up “additional opportunities” for some businesses.
- Markets, Jan 21
It went as weak as Rbs84.77 earlier today, a record low (or high, depending on which way you want to read the chart). Nomura’s Timothy Ash has argued that “if oil stays at 30 bucks the rouble is going to 85-90 against the dollar….” As he said earlier in the month:...MORE
Interestingly though the 2016 budget was based on an average oil price of USD50, and an average rubble exchange rate of RUB63:USD1. With oil now approaching USD30 a barrel, further and significant ruble weakness seems inevitable. Even allowing now for the depreciation in late 2015, and early 2016, taking the ruble to RUB75.50:USD1, in REER terms we still seem some way from REER parity with oil at say USD30 – i.e. a REER level of nearer to 110 (as in 2003), as opposed to around 117 at present ( or thereabouts). If oil stays where it is at present, given 10% inflation, this would imply still significant real and nominal depreciation of the ruble to come – more likely in the 85-90 range against the USD in nominal terms and far distant from earlier budget assumptions. This would be remarkable, signifying that the ruble will have lost close to two thirds of its value since mid-2014, albeit oil has also dropped by similar relative amounts over this period.And now on what might actually trigger intervention, namely dollarisation:...
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