Surprise easing from CBR sinks Rouble

A surprise rate cut by Russian Central Bank at a time, when the currency is already suffering with lower oil price, especially Brent, created havoc for Rouble which is down around 2.7%, so far today.

The Central bank of Russia has cut its benchmark interest rate by 50 basis points to 11%. Dollar was trading at 60 against Rouble before the decision and currently trading at 61.

Rouble is clearly not liking the ways things are moving. It is down more than 11% in last 1 month, more than 18% in last 3 months and more than 70% in last 12 months.

And now, the Central Bank clearly not to back it up, it might get even worse for Rouble. Central bank after hiking rates by 6.5% to 17% in December to protect Rouble, has steadily been reducing rates this year.

Crude is in its round two moves to the downside this year.

With much of its earnings coming from energy exports, Russian economy is headed of recession this year, which might as well extend to the next.

Active call -

• Initial call was given in favor of dollar at 54 and with target around 60, which is reached. We have advised to target 63 with small positions.
  
  
• Today with rate cut given the target is most likely to reach over the coming weeks. Rouble might push even lower, with today's rate cut.