RUB might weaken temporarily against USD over next 3 months

Any significant impact of rate cuts is not seen on the RUB if the CBR cuts its policy rate according to expectations. OFZs seen benefiting further from anchored expectations on monetary easing. 

"The key rate is likely to fall to 7% in late 2016, which would support the restoration of economic growth. Any tightening would be very destructive for Russia's economy, while it would not prevent possible RUB weakening if the oil price continues to fall", says Danske Bank.

Yet, a marginal RUB strengthening effect cannot be excluded from possible monetary easing, as, in Russia's case, the markets have been interpreting rate cuts as RUB supportive on improving economic prospects rather than seeing cuts as diminishing carry opportunities.

"The RUB might weaken temporarily against the USD over the next three months to 70.00, as the Fed is likely to start tightening its monetary policy in Q1 16, weighing on emerging markets assets globally", added Danske Bank.