At the beginning of a new week of trading the Russian ruble remains the weakest CEEMEA currency so far this month due rising risk that the EU could impose a new set of sanctions on Russia. Upside pressure on USD/RUB prevails with potential to reach the 77 level, economists at Rabobank brief.
Key quotes
“Chancellor Merkel reportedly supports statements from Foreign Minister Maas who warned that Germany could put the Nord Stream 2 gas pipeline on hold. Russia has a few days to explain the circumstances regarding Navalny’s poisoning. ‘If there is no contribution from the Russian side, we will have to discuss an answer with our partners’, Maas told Bild am Sonntag newspaper.”
“Russia’s strategy at this stage is to gain as much time as possible before responding to the inquiries. The Kremlin continues to claim that it has not received information from Germany authorities regarding Navalny’s poisoning. It remains to be seen how patient the EU is before taking action against Russia. Based on Maas’ remarks Russia has only a few days left to prevent the crisis from escalating further.”
“Until Germany is satisfied with a response from Russia, USD/RUB has the potential to breach the initial resistance at 75.9540 (tested on Monday, but not cleared just yet) and extend its gains towards the 77 level.”
“It has to be stressed that if the EU opts for particularly harsh measures against Russia (potentially in cooperation with the US), USD/RUB could revisit the March top at 82.8729.”
“EUR/RUB is likely to breach the 90 level if EU-Russia relationship deteriorates further in the coming days.”
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