Perfect Storm For Russian Assets

Heightened market volatility and concerns over Russia's policy environment have continued to pound the Russian rouble in recent weeks. Precluding major central bank intervention, we believe that the rouble will remain under heavy selling pressure as the eurozone debt crisis continues to intensify and global investors aggressively re-price economic growth and (by extension) rate expectations across the region. Having previously identified the break of key technical support at RUB31.20/US$ as a major bearish signal, the unit has since continued to push lower, trading at RUB32.70/US$ at one point on October 5.

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