020 7898 050020 August 2014
RUB (Russian rouble) Current Rate:
RUB 60.1579/£1; RUB 36.0862/US$1
The struggle between pro-Russian forces and the Government in Ukraine has had a direct effect on Russia’s fortunes, with major economies levying additional economic sanctions, which have encouraged further capital outflow. Russia retaliated by banning food imports from the West, further restricting its overseas trade and further straining its political relationships with the West. The move led the currency to hover near an all-time low against currencies like the US dollar.
It came as no surprise, then, that the Bank of Russia is inching towards a free-floating exchange rate, in order to focus the eye of policy onto inflation, rather than managing the exchange rate and its associated volatility and risks. The central bank widened the rouble’s trading corridor from 2 roubles to 9 roubles, in preparation for the latter’s abolishment by January 2015, when the rouble will be trading freely. There is, however, scope left for the central bank to make discretionary interventions in the event of financial instability – a caveat slipped in, presumably, over concerns about the situation in Ukraine. The Bank of Russia has also pledged to stop interventions within the trading corridor in order to lessen currency market volatility.
Despite the central bank’s efforts to bolster the Russian economy, the unresolved and ongoing situation in Ukraine will make its efforts a challenge, and hamper Russia’s role in the global economy. As such, we expect to see the Russian rouble weaken further against sterling in the coming months.
Rate forecasts for GBP/RUB:
| Time Length | Rate |
| 1 month | 60.7893 |
| 3 months | 61.0300 |
| 6 months | 61.3470 |
Forecasts accurate from 20 August 2014. Data taken from Reuters’ poll.
Data sourced from GBP/RUB and USD/RUB cross.
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