Crude rally may help RUB via macro-stability – ING

ING’s Russian Chief Economist believes that the spike in oil may have a short-term positive impact on the RUB.

Key Quotes

“It’s worth remembering that in Russia there is a fiscal rule, which essentially forces the economy and markets to perform as if Urals is fixed at $41.6/bbl+2% p.a, making RUB less of a commodity currency and more of an EM story.”

“That said the higher oil price further improves the perception of Russia’s macro stability, potentially supportive for portfolio inflows into the local state bonds (OFZ), but it’s unclear how the general EM risk perception changes if Middle East tensions escalate. For now, we maintain our USD/RUB forecast of 63-67/$ into year-end, while acknowledging some upside risks.”