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4 Dec 2014
RUB on the brink of a financial crisis – Rabobank
FXStreet (Barcelona) - Piotr Matys, FX Strategist at Rabobank sees the biggest selloff in RUB since 1998 pushing Russia towards financial crisis.
Key Quotes
“The biggest RUB selloff since 1998 poses a serious threat to financial stability in Russia and increases pressure on the Bank of Russia to take concrete steps to stabilise the currency.”
“Given that foreign currency reserves are not yet at a critical level, the central bank can defend the ruble by selling substantial amounts of hard currency. However, if large scale FX interventions prove insufficient, the odds for a fairly aggressive interest rate hike will increase when policy makers meet for the last time this year on December 11.”
“While further monetary policy tightening would inflict even more pain on an already weak economy, stabilising the ruble should be a priority to prevent the worst case scenario of a full-blown financial crisis.”
Key Quotes
“The biggest RUB selloff since 1998 poses a serious threat to financial stability in Russia and increases pressure on the Bank of Russia to take concrete steps to stabilise the currency.”
“Given that foreign currency reserves are not yet at a critical level, the central bank can defend the ruble by selling substantial amounts of hard currency. However, if large scale FX interventions prove insufficient, the odds for a fairly aggressive interest rate hike will increase when policy makers meet for the last time this year on December 11.”
“While further monetary policy tightening would inflict even more pain on an already weak economy, stabilising the ruble should be a priority to prevent the worst case scenario of a full-blown financial crisis.”