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16 Dec 2014
Russia sees a rate increase to 17% - Rabobank
FXStreet (Barcelona) - The Rabobank Research Team notes that the Russian central bank raised rates from 10.5% to a surprising 17% to stem the RUB decline, which caused the Russian currency to meltdown.
Key Quotes
“In Russia the central bank raised rates from 10.5% to 17% less than a week after a scheduled 100bp hike to try to stem the collapse in RUB: it didn’t work, and the Russian currency closed in total meltdown at past 64.23.”
“For those who lived through the Asian crisis of 1997 this all looks grimly familiar. Oil had tried to rally during the session but ended up closing little changed, which did not help sentiment there.”
“Elsewhere, INR finally succumbed to the end-year “sell everything that is not USD” mania, slipping to nearly 63, and IDR was even more badly impacted, hitting 16-year lows past 12,700: hopes for a rally back in IDR on a fundamentals basis look increasingly forlorn with present momentum, but equally the more oversold the currency is, the greater room for recovery when calm returns, as we saw in early 2014 for a period.”
Key Quotes
“In Russia the central bank raised rates from 10.5% to 17% less than a week after a scheduled 100bp hike to try to stem the collapse in RUB: it didn’t work, and the Russian currency closed in total meltdown at past 64.23.”
“For those who lived through the Asian crisis of 1997 this all looks grimly familiar. Oil had tried to rally during the session but ended up closing little changed, which did not help sentiment there.”
“Elsewhere, INR finally succumbed to the end-year “sell everything that is not USD” mania, slipping to nearly 63, and IDR was even more badly impacted, hitting 16-year lows past 12,700: hopes for a rally back in IDR on a fundamentals basis look increasingly forlorn with present momentum, but equally the more oversold the currency is, the greater room for recovery when calm returns, as we saw in early 2014 for a period.”