CBR key rate likely to fall to 10% in December 2015

Any tightening would be very destructive for Russia's economy, while it would not prevent possible RUB weakening if the oil price continues to fall. As the Iran deal and turmoil in China's stock market have recently pushed commodity prices lower, the falling oil price is dragging the rouble down. 

"At the moment, the CBR is paying much more attention to economic growth prospects than to inflation figures. CBR key rate is likely to fall to 10% this year and 7% in late 2016, which would support the restoration of economic growth", says Danske Bank. 

Over the past 30 days, the Russian currency has lost more than 6% against the USD. 

"We continue to expect a moderate weakening over the next six months to 72 against the USD. The major upside risks for our USD/RUB forecast are the Fed's more aggressive than expected rate hikes and continuing fall in the oil price", added Danske Bank.