Undervalued RUB to gain momentum soon

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Undervalued RUB to gain momentum soon

The Russian ruble is still showing remarkable resilience despite the pressure from the Russian authorities. Moreover, the ruble regained momentum at the end of the last week. At first glance, the lingering Western sanctions are mainly to blame for its weakness. However, experts say that the ruble has proved to be immune to the pressure of restrictions, imposed by the US and the EU. Indeed, the Russian currency is more vulnerable to the domestic monetary policy and the Kremlin’s interest in the ruble’s depreciation. Even foreign analysts share the viewpoint that the Russian currency is greatly undervalued. Therefore, its growth is imminent. Obviously, the Western sanctions do not pose a grave threat to the domestic economy. They are unlikely to cause the ruble’s collapse provided that the US does not set this goal. Meanwhile, the US is just playing with Russia, targeting particular sectors of the Russian economy. In case Washington proceeds to severe measures, the Russian economy will be doomed to failure.

Anyway, the White House has been extending a list of sectorial sanctions. In this context, the ruble is expected to strengthen to 58 against the US dollar by the year end. The ruble’s dynamic has come to expectations as long as the US has not applied strategic sanctions yet. The Russian currency is picking up steam after the Bank of Russia unexpectedly raised the key interest rate. The US is determined to prolong the sanctions indefinitely, so the Russian economy is set to adjust to exterior developments. The ruble copes remarkably well. Nowadays, its value largely depends on economic fundamentals, which actually mirror purchasing power of the Russian national currency. A month ago, some economists assumed the ruble could weaken to the bottom of 68 versus the US dollar.





Published: 2018-09-27 10:37:22 UTC
 
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