VIEWPOINT: Risks of further ruble weakening remain - Nordea Bank
MOSCOW. Feb 3 (Interfax) - The ruble will most likely remain under pressure owing to the outbreak of the coronavirus in China, and risks remain for its further weakening, Nordea Bank wrote in an analytical note.
The ruble remains under pressure owing to the outbreak of the coronavirus in China, as the spread of the virus is not yet under control, Nordea Bank analysts wrote. The number of victims contracting the virus will most likely determine the rate performance for the current week, and risks of further weakening of the ruble remain. Triggers for renewed weakening could be an increase in the number of countries affected by the virus, new fatalities beyond China's borders, and the extension of necessary days off in China as a factor in the additional downward growth trend of the Chinese economy.
"The ruble lost 3.5% against the dollar for the two-week period, during which markets remain focused on the coronavirus, while the currencies of emerging markets on average were down 2%. The ruble remains an outsider among similar currencies, coming under pressure from the sharp drop in oil prices on the back of concerns in regards to demand for energy products in China. The ruble could well end up outperforming EM currencies, recovering from the past two weeks of sharp decline, as situation with the coronavirus stabilizes," Nordea Bank said. "Support for the ruble this week could come from the verbal intervention of OPEC+ as part of a meeting being planned for February 4-5. The upcoming meeting of the Central Bank of Russia, from which we expect key rates to remain at the current level, is unlikely to affect the ruble."
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