USD/RUB: Rouble to stay stronger before partially reversing gains in 2022 – MUFG

USD/RUB has broken below the 70.000-level for the first time since June of last year. Fundamentals continue to favor stronger rouble but current tailwinds should ease in 2022, according to economists at MUFG Bank.

RUB benefits from rising energy prices 

“We are not expecting OPEC+ members to speed up plans to increase oil production at their upcoming meeting in November despite calls from global consumers. We do however expect the price of oil to drop back in 2022 as tightness in the oil market eases which should also help ease current tailwinds in favor of a stronger rouble.”

“The CBR has signaled that it expects higher rates to be maintained for longer. The policy rate is expected to average between 7.3% and 8.3% in 2022 compared to their previous forecast of between 6.0% and 7.0%. The CBR is concerned that higher inflation will prove more persistent than initially expected.”

“We expect the rouble to remain stronger in the near-term before partially reversing gains in 2022.”