Rouble Will Head to RUB41.00/basket

The Russian rouble plunged to record lows on January 29, at one point trading at RUB39.75 versus the dollar-euro basket it is managed against. Both the dollar and euro crosses were also trading at historic lows of RUB34.96/US$ and RUB45.62/EUR, respectively. The depreciation was particularly significant considering that one week prior, both the central bank and political leadership had made key statements indicating that the rouble had hit an equilibrium point just below RUB37.00/basket and that much further depreciation would be unlikely. In line with our view, the opposite has occurred, with investors continuing to short the rouble in anticipation

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