The value of Russian ruble has risen with the help of increased crude oil prices. If crude oil prices continue to rise, the ruble might benefit further, said Lloyds Bank in a research report. News that the US might not conclusively prove Russian collusion in the 2016 US presidential also came to the aid of the currency. Furthermore, the Russian economic activity further rebound last year, with GDP growth accelerated to 2.3 percent. This is in sharp contrast to nearly flat growth recorded in 2016 and a sharp contraction in 2015.
However, there are also reasons to expect further upside in the RUB to be slightly limited, said Lloyds Bank. Firstly, the economic growth is expected to slow down slightly this year, partially because of lower hydrocarbon activity related to OPEC+ production cuts. Moreover, central bank measures to limit household debt and consumption are also expected to have a negative impact on growth. Secondly, lower inflation expectations might prompt the central bank to lower interest rates. The Russian central bank had lower its inflation forecast to the end of year to 4.7 percent-5.2 percent,
“We forecast USD/RUB to end the year at 61”, added Lloyds Bank.
