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EMEA Weekly: October 11, 2013

ByDanske Markets
Published 10/11/2013, 06:18 AM
Updated 05/14/2017, 06:45 AM

Rouble is a long way towards free float

This week Russia's central bank Bank Rossii has updated its main description of the bank's FX policy, which has been characterised as "managed floating exchange rate" for the past 14 years. However, the path to a free-floating rouble has been long. Bank Rossii's latest promise is a free-floating rouble in 2015 when the central bank would still have the right to carry out FX intervention to mitigate volatility. However, we are not convinced a free-floating rouble will be achieved by 2015, as it has been making similar promises for many years. The previous target was by the end of 2013. Yet, we believe it has been moving in the right direction since 2012, when the central bank increased its focus on targeting inflation. Slowing economic growth has not had any impact on Bank Rossii's mind.

We warmly welcome both the central bank's consistent path towards a freely floating RUB and improved communication with market participants under the new chairperson Elvira Nabiullina. However, we are still sceptical about the RUB free float becoming true in 2015.

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