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RUB Retraces Friday Weakness as Geopolitical Risks Simmer, Nabiullina Voices CPI Concerns

RUSSIA
  • USD/RUB trades -1.16% lower this morning, brushing off early weakness in oil markets to pare some of Friday's Ukraine-induced move higher.
  • Over the weekend Putin moved to soothe rising geopolitical tensions by pledging assistance in the Poland-Belarus issue, while also refraining from conducting naval drills in the Black Sea to counter unplanned US & NATO drills.
  • Nevertheless, the geopolitical risk premium in RUB assets has ticked up slightly from a low base and remains a concern over the coming days as the EU looks set to impose sanctions on Belarus.
  • However, we still do not see this escalating in a meaningful way with Lukashenko unlikely to unilaterally cut off EU gas supplies without direct consent from Putin.
  • Nabiullina has also been on the wires this morning, sounding pretty hawkish on expectations and risks of spiraling inflation.
  • This should keep RUB well-supported and may see USD/RUB drift back towards the 70.50-71.50 zone as geopolitical fears unwind somewhat.
  • 3QA GDP is also on the agenda this week, expected to moderate to 4.5% following an easing in the pent-up demand experienced in Q2.
  • On the international front, US industrial production and retail sales data are the key global data points to watch.
  • Intraday Sup1: 72.0654, Sup2: 71.6864, Res1: 72.6783, Res2: 72.8474
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
BulletEM BulletEmerging Market NewsHomepage

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