Russian macro fundamentals continued to weaken in Q1 13, as high inflation weighed on private consumption and tight monetary policy depressed fixed investment growth through extremely expensive corporate lending. Compared to a year ago, macro indicators have weakened the most. Private consumption is growing, albeit at a slower pace.
EUR/USD outlook: The Cyprus deal and U.S. economic growth have been weighing on the pair. We still see the pair moving higher in the near term on the ECB refraining from rate cuts as the outlook remains decent. Towards year-end focus is likely to turnincreasingly towards a Fed exit, and we expect a weaker euro.
EUR/RUB recommendation: Due to the uncertain medium-term consequences of the Cyprus deal, we recommend increasing the hedging ratio, as current data points to acceleration in rouble volatility. We again recommend using participating forwards to hedge rouble receivables. While this gives a full hedge against weakening of the rouble, it should allow investors to partly benefit from the rouble's strengthening.
To Read the Entire Report Please Click on the pdf File Below.
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EUR/RUB Hedging Scorecard: April 3, 2013
Published 04/03/2013, 03:09 AM
Updated 05/14/2017, 06:45 AM
EUR/RUB Hedging Scorecard: April 3, 2013
Rouble outlook:
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