Konstantin Kostrub, Director at ING Bank Eurasia Zao, on the Russian Rouble

Note: This section contains information in English only.
Source: Dukascopy Bank SA
How would you evaluate the current performance of the Russian Rouble? What are your forecasts for the currency performance against its main counterpart, the U.S. Dollar?
The Rouble performance for the last, let us say, one-two months was relatively good, but after the QE3 announcement by the Fed, the currency appreciated very sharply. During the last days we saw a lot of volatility in the Russian Rouble, but still the currency stays a bit firmer then it was three months ago. Our research forecasts are as follows - the Russian Rouble will be weaker at the end of the year and in terms of the bi-currency basket, it can reach the point of 36.50.

This week the Bank of Japan expanded its monetary easing programme by 10 trillion Yen. It is expected that due to the programme enhancement, fuel demand will increase.Do you think this will have an effect on the Russian Rouble?
There is no direct correlation between the Russian Rouble and the Japanese Yen.  With expansion of the monetary easing programme the Bank of Japan created more liquidity in the market and this will definitely lead to the Rouble appreciation. Even though there is no direct connection between the currencies, as mainly the Rouble is traded against the U.S. Dollar, the Japan's recent actions will work for the Rouble appreciation.

In your opinion, what will be the other drivers, which will determine the Rouble's performance in the future?
The main driver, in my opinion, will be the world prices, as well as export prices and budget expenditures. The fact is that we have some sort of a liquidity squeeze currently and banks are borrowing from the Central Bank of Russia. We expect that at the end of the year the situation with liquidity will improve and, consequently, more roubles will go into the market. This sector works for rouble depreciation. From another side, having the world prices at a quite high level, above one hundred dollars per barrel, it gives us some room for appreciation. At the same time, budgets are trying to withdraw these funds; the additional profits are going to the budget, but in the end of the year, some more roubles may come from the budget. About the oil prices - it is expected for Euroclear to open the doors for foreign investors. As soon as Euroclear will be able to settle local securities, it will again work for the Russian Rouble appreciation. We expect this sector will work not earlier than in the next year.

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