The Pound Sterling to Russian Ruble (GBP/RUB) exchange rate rocketed by around +1.56% in Monday’s trading after the Bank of Russia raised rates for foreign currency lending, the Russian Ruble to US Dollar (RUB/USD) exchange rate dropped by a massive 2.8% to hit lows of 53.388.
The Russian Ruble tumbled against a host of other majors after making gains earlier in the session, as the charge for borrowing US Dollars rose higher in the third such move by the central bank since the end of March.
Economist Dmitry Polevoy commented: ‘It’s a signal that the central bank is not very happy, that its instruments fuelled such a sharp Ruble advance. The Ruble has strengthened a lot and people may take advantage of any reason for correction.’
Bank of Russia Rate Rise Causes Ruble (EUB) Exchange Rate Weakness
However, the Bank of Russia has suggested that although the Ruble exchange rate may fluctuate in the near future, for the main part it should remain stable provided oil prices are relatively steady and no further sanctions are placed against the nation.
Bank of Russia First Deputy Governor Ksenia Yudayeva wrote: ‘As a whole, in my opinion, the Ruble has entered a process of stabilisation around new levels that take into account higher… [than expected] oil prices and a lower premium for geopolitical risks and risks of limiting capital flows.’
‘In the absence of significant changes [… to oil prices, imposing new sanctions of lifting existing ones, unexpected changes to monetary policy in other countries], the rate in the medium term will be relatively stable.’
Meanwhile, Russia’s Gross Domestic Product (GDP) ecostat was pushed back from the 1:00 GMT release, to 15:00GMT on Monday and will detail growth within the country. Economists have suggested that the figure will improve from -2.3% to -2.0% on the year in March.
US Dollar to Russian Ruble (USD/RUB) Exchange Rate Forecast
Meanwhile, the US economy disappointed economists’ forecasts on Monday when the Chicago Federal Reserve’s National Activity Index contracted further in March from -0.18 to -0.42, rather than climbing to 0.10 as predicted.
The US Dollar exchange rate has softened recently on account of weaker-than-forecast data and some economists are now suggesting that the US Federal Reserve may struggle to hike interest rates this year.
Federal Reserve official William Dudley suggested on Monday that even after the Fed initially hike interest rates, monetary policy will remain loose for some time.
Dudley stated that although he hopes that policy adjustments will be made this year dependent on data, he’s uncertain.
Dudley commented: ‘We’ll have to see what unfolds. [But] the timing of normalisation remains uncertain because how the economy evolves is also uncertain.’
The week’s most interesting US data release will be Durable Goods Orders on Friday, which could be of high influence for the US Dollar to Russian Ruble (USD/RUB) exchange rate.
Pound Sterling to Russian Ruble (GBP/RUB) Exchange Rate Forecast
The Pound Sterling to Russian Ruble (GBP/RUB) exchange rate is likely to fluctuate on Wednesday with the release of the Bank of England’s (BoE) April meeting minutes. If policymakers shared a difference of opinion on the topic of interest rate hikes, the Pound Sterling exchange rate could rally.
Meanwhile, any geopolitical developments could influence the Russian Ruble, Pound Sterling and US Dollar exchange rates.
The Pound Sterling to Russian Ruble (GBP/RUB) exchange rate is trading at 79.4233; the US Dollar to Russian Ruble (USD/RUB) exchange rate is trending in the region of 52.2833.