USD/RUB forecast ahead of the Central Bank of Russia rate decision

By: Crispus Nyaga
Crispus Nyaga
Crispus is an active trader, where he is followed and copied at Capital.com. He lives in Nairobi with his… read more.
on Sep 10, 2021
  • The USD/RUB pair has been under pressure in the past few days.
  • The pair will be in the spotlight as the Central Bank of Russia makes its decision.
  • Analysts expect the bank will hike interest rates.

The USD/RUB will be in the spotlight on Friday after the Central Bank of Russia concludes its September meeting. The pair was trading at 72.90 on Friday morning, which was about 0.90% below the highest level this week.

Central Bank of Russia decision preview

The Russian central bank is set to increase interest rates for the second consecutive month in its bid to tame the rising inflation. Economists polled by Reuters expect the central bank will hike interest rates from 6.5% to 7.0%. This will make it one of the most hawkish central banks in the world. Besides, it has moved rates from a historic low of 4.25% last year.

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The decision will come a day after the Russian statistics agency published relatively strong consumer inflation data. The headline consumer inflation rose from 6.46% in July to 6.68% in August. This was the sharpest increase since August 2016. The data cruised above the median estimate of 6.6%. The Russian central bank’s inflation target is at 4%.

Most notably, the core CPI, which excludes volatile food and energy products, rose from 6.8% to 7.1%. This trend in inflation was likely because of the recent handouts by Vladmir Putin. He announced a cash handout of about $140 to more than 43 pensioners ahead of the State Duma. 

Central banks typically raise interest rates in a bid to tame inflation. That’s because higher rates put brakes on borrowing. It also incentivises people to save since their savings generate a better return. 

The Russian central bank will join other banks that made their decisions this week. In a report earlier today, Peru’s central bank boosted rates by 50 basis points. On Thursday, the European Central Bank (ECB) left interest rates unchanged and lowered the pace of asset purchases. On Wednesday, the Bank of Canada also left rates unchanged.

USD/RUB technical analysis

USD/RUB

The USD/RUB pair has been pressured, having declined from this week’s high of 73.50 to 72.90. The pair has managed to move below the 25-day and 50-day exponential moving averages (EMA). It has also found a strong support since this price was also the lowest level on August 2. 

Therefore, the pair will likely break oiy lower as bears target the psychological level at 72.00. For this to happen, the pair wll need to ,move below the key support at 72.70.

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