The analyst who most accurately predicted the ruble’s rally in the second quarter is now its most pessimistic forecaster.
The Bank of Russia’s switch to monetary easing is the reason Jaroslaw Kosaty, a currency strategist at Poland’s largest bank, sees the currency sinking about 9% against the dollar by the end of the year. Foreign investors who piled into local OFZ bonds in anticipation of the cuts are largely done staking out their positions and the Bank of Russia says it expects the non-resident flows to fade, exposing the currency to further interest-rate reductions.
A second consecutive interest-rate reduction is possible at the central bank’s next meeting and it isn’t ruling out a cut of 50 basis points, Governor Elvira Nabiullina said earlier this month. According to Kosaty, the Bank of Russia will lower rates gradually by 25 basis points in the third and fourth quarters, though a 50 basis-point step is still possible at the July 27 meeting.
So how low can the Ruble fall relative to the US Dollar, lets go to the charts?
Monthly Chart (Curve Time Frame) – monthly supply is at 77.000 and monthly demand is at 50.000.
Weekly Chart (Trend Time Frame) – the trend is sideways with a downside bias.
Daily Chart (Entry Time Frame) – there is no entry to short at the moment, but the chart suggests price can move down short term to the daily demand at 57.400.
This post is my personal opinion. I’m not a financial advisor, this isn’t financial advise. Do your own research before making investment decisions.