USD/RUB

Some analyst already said that Russia tries to introduce Autarky in his economy. Russia is a big country with quite high potential, but even such country cannot afford to have closed economy without paying very high costs of it. Such examples like Cuba or North Korea are the good examples how the closed economy looks like. Of course there are signficant differences between these Countries and Russia especially regarding oil and gas resources but by definition such strategy will not bring prosperity to Russian economy. In my opinion Ruble will become nonexchangeable in the future if this strategy develops further.

Vladimir Putin, younger.

... Russia is in a stronger position than some might think:

http://www.paulcraigroberts.org/2014...aig-roberts-2/

http://russia-insider.com/en/2015/12/30/2179

Russia will have a tough mission to defend rouble, during 2,5 session this year ruble weakened by almost 10%. Holiday period in Russia can make things even worse. Other CEE currencies, PLN, HUF, CZK are losing as well.

The Czech National Bank fixed CZK currency to the EUR by printing money on 27 CZK per EUR (7.11.2013). They said "we would like to reach or keep the CZK about 27 per EUR and if it is more it's also good for the Czech economy" . When EUR is losing the CZK is loosing as well. Some Czech economists think that the Czech National Bank could weaken CZK more and the price could go down to 30 CZK per EUR if the ECB starts printing money this year.

Paradoxically printing money by ECB may not weeken Euro, if country doesn't have a foreign debt and produces many goods internally (like China) then weakening domestic currency can bring a good effect.

Russia must not had let the ruble that much in short time, its CB reacted slow and late! They look not interested in correcting at least half the weakness resulted.
50-55 maybe fair for them until major shift in ?

Impressive if Russia CB can make Usdrub 30 again, anyone ?

Personally, I think that is way too optimistic. I don't have a crystal ball, but provided the sanctions are removed and oil prices stabilize, I would be surprised if the ruble recovers below $40 (provided oil doesn't go up to $100, which I don't think is happening anytime soon) anytime this year.

The best thing going for Russia is the fact the conflict in East Ukraine is pretty much over and a permanent ceasefire is being negotiated, with Moscow now openly involved in its negotiation. "Ideological" type characters on the part of the separatists are being continually replaced or eliminated (Strelkov, Bezler, most recently Bednov, etc), with pretty much just one such character remaining (Mozgovoi), and are being exchanged for docile characters that are willing to work "with" the Kremlin.

Once a ceasefire is established, the economic sanctions will either begin to be lifted, or at least be allowed to expire by the EU by July 31st. Extending the economic sanctions past July 31st will require the unanimous approval of all EU countries. Judging by the post-December rhetoric coming from France, Italy, Cyprus, Greece, Austria, and Hungary (and to some extent Latvia and Slovakia), there is little prospect of EU agreeing to extend economic sanctions unanimously by July 31st. To be sure, symbolic travel bans and asset freezes on individuals are likely to be extended, but these are largely symbolic. Economic sanctions will go since they will cease to serve a purpose.

If and when European sanctions expire, Washington is likely to follow, as Obama is against unilateral actions that may give the Europeans an advantage over the US. This would significantly help Russia's current corporate debt refinancing problem and allow it not to burn through its foreign reserves. This would strengthen the ruble. Personally, that's what I'm holding out for.

In the short-term, expect some more volatility. There is a meeting scheduled for January 12 in Berlin between the foreign ministers of the Normandy format countries. Another meeting was discussed for January 15 between the heads of state, but it is looking increasingly likely to be rescheduled (unless the FMs have some major breakthrough - which is unlikely). Watch for both events however.

The first round of symbolic sanctions (not economic) are scheduled to be expired on March 15, unless extended by the EU. Putin has a meeting with Orban (Hungary) in early March, probably to try to win Russia Hungary's support in vetoing the extension of symbolic sanctions. My guess is we will see more Russian concessions sometime in mid to late February in preparation for the meeting with Orban and therefore a slight bounce in the appreciation of the ruble. That (Russian concessions) would be the next event I'd pay attention to if I wanted to make a quick buck shorting USD/RUB. You'll probably have a short window of a day or two before the market reacts after that announcement to buy short USD/RUB. I doubt however that these concessions will prove to be enough, hence why I'd recommend on a quick exit from your position before the actual EU meeting on the 15th. The sanctions set to be expired on March 15 are tied to Crimea, an event that will not be resolved. Merkel said she supports removing sanctions not tied to Crimea if the Minsk Accord (ceasefire in East Ukraine) is fully implemented. I expect the EU (including Orban) to agree to extend symbolic sanctions tied to Crimea on March 15.

Good Economical and Political Outlook. Don't worry, the Europeans can't take advantage over afghanistan, not in dreams over the US.

Europeans are stuck with their own problems, will reach the peak in short months time after Greek and Britain elections that will trigger other countries that are already on the ground financially to ask for exit.

UsdRub can stay for sometime 50-60 mostly that was the price before Russia CB announced raise in interest rates, then will start declining to 40 and 30.

Any clue why UsdRub pumped to 78 just after Russia CB announcement?! Any other currency must had strengthened instead of weakened!

Do you think this pair was like hacked by a combined effort of several CB's for political reasons we all know about, just to "punish" Russia and Putin for his decisions?

Might they repeat the test or positive political efforts between Russia and the US will hold on the pressure on the pair?

As I said on here when the rate hike was announced, it was done prematurely. Especially since the communication from the CBR, which is an art in its own right, in advance of and following the rate hike was abysmal. It made it look like CBR was clueless and just panicking itself. Finally, Rosneft's issuance of the 650 billion ruble bond, which put immediate massive pressure on the ruble was ridiculously ill-timed and amateurish, especially when coupled with the CBR's lack of initial intervention. All of these factors contributed to a self-fulfilling full-blown panic that was not supported by any real fundamental reasons (see my comments here when it was happening on December 16).

No. Just as I don't believe the Russian narrative that oil price decline is engineered to punish Russia and Iran. In my opinion, Russia's own politics (Rosneft bond) and incompetence of the CBR were largely to blame for the initial run up. To be fair, the CBR did ultimately react very correctly shortly after the run up. I think they get the point now - fight fire with fire.

Till the end of the January USDRUB will hit December levels again and CBR will not be able to do anything with it. They have spent already a quarter of all reserves and Putin will not be so reckless to spend everything. Untill any positive decisions for Russia are taken by Western Countries Ruble depreciation will continue.

RF rating finally cut to junk by S&P, hardly a surprise, but still an important event. We'll probably see some volatility with the ruble following this, especially in light of recently renewed fighting for the control over several areas and prospects of more sanctions (really just statements from a few Eastern European states that have a grudge against the RF).

For those wondering what's going on with the renewed fighting - basically the Foreign Ministers of Kiev and the RF couldn't agree at their meeting on the borders of the territory to be conceded by Kiev. The agreement in Minsk signed in September that's been the backbone of the ceasefire stipulated that a few territories that were in control by Ukraine would be conceded to the separatists (specifically these appeared to have included the city of Peski and the Donetsk Airport. Ukraine appears to have decided this is unfair (or just politically difficult, since it would seem like capitulation to give up areas for seemingly nothing) and therefore Kiev pushed for the RF to give up Navoazovsk, a city which the "separatists" only took possession of as a result of RF's direct involvement in August (which directly resulted in Kiev completely capitulating and having to sign the immediate ceasefire). Kiev's argument appears to be that this city was not "fairly won" - even though it appears to have been agreed upon to be now controlled by the separatists during the mutually agreed upon Minsk Accords. RF is now attempting to enforce the "ceasefire" with Kiev by force through its separatist proxies by taking the territories agreed upon in the Minsk Agreement by force. In fact, the separatists have made progress in "resolving" this territorial dispute by taking control over the airport and pushing toward Peski, the two most contested areas. Next step would be taking control of Peski, which is significantly more difficult than the airport. I highly doubt we'll see any major offensives by the separatists (for example on Mariupol or Avdiivka) on territories not agreed upon in the Minsk Accords. However, I would not be at all surprised if the RF gets directly significantly involved again, either to push Ukraine out of Peski by force if the separatists aren't successful themselves, or help the separatists make a similar scenario to what they did in August/September - surround a large pocket of Ukraine's troops and force them to surrender and for Kiev to accept a ceasefire. Such a situation for Ukrainian troops appears to be forming around a city called Debaltsevo, but would require separatist control over quite a bit more territory (which means more fighting).

What will all of this fighting result in? It kind of depends how successful the separatists are without RF getting directly involved as they did in August. Despite the rhetoric from a few Eastern European states, I find it almost impossible that EU will impose additional sectoral/economic sanctions without RF's direct involvement (the involvement of which might result in the EU freaking out again and imposing new sanctions). Everyone appears to understand what the new fighting is connected to - a disagreement over fairly small territories which were technically already agreed upon. I do find it likely that new symbolic sanctions against individuals will be imposed "to show western solidarity with Ukraine against Russian aggression," but these are symbolic more than anything else. I don't think anything's changed about all sides accepting that a frozen conflict is the only possible resolution. As such, my prediction that economic sanctions will expire once they start coming up still stands. The RF has a few good things going for it in this respect. Russia getting France to break ranks with the EU repeatedly already with sticks and carrots (threats over Mistrals and now offering cancellation of pork trade embargo) and Syriza's win in Greece being probably the most important.

There is also a possibility that Russia will decide to make a corridor to Crimea and they will have to take over Mariupol and next cities which will be on the road, then EU and US sanctions will not expire and they will be widened. Putin is in a tough situation because he fed the nationalist movements and their appetite is growing, they will be pushing him to show "the power of Russia" so the future can be much different than you scenario.

The only way that RF could make the decision to "establish a land corridor" is if the west loses its head and pushed for some nuclear option like kicking Russia out of SWIFT. Russia has frankly said it would consider that as a declaration of war, which I doubt people think is just chest-beating since it's coming from the highest levels (Prime Minister) and is understandable given the predicament the RF's economy is in. Our politicians are many things, but I don't think they are completely insane.

If Russia had any such plans they would have realized them when RF forces actually intervened and overran all Ukrainian defensive positions up to Mariupol in late August (see Girkin's comments on this, since he was obviously very much "in the know" at the time). In fact, that was clearly the point Putin made to the west when he offered Ukraine the ceasefire and ordered the forces to pull back - "we could take Mariupol right now, but we won't, to show you that establishing a corridor is not in our intent." There is absolutely no way at this point that separatists have any possibility whatsoever of taking over defensive positions of Mariupol by themselves without RF armed forces direct, significant, and very blatant invasion. I doubt the RF would have waited all this time to allow Ukraine to build up their defensive capabilities and mobilize.

We'll probably see some new symbolic western sanctions on the RF follow this week on Thursday (asset freezes on individuals). Meanwhile, PACE supports restoring Russia's voting rights: http://www.kyivpost.com/content/russ...ov-378572.html. In other words, let's make appearances we're all very angry with Russia, but act in an opposite way. That's going to be the norm up and through July. Harsh rhetoric, followed by actions to normalize relations. It's entertaining to watch this drama unfold.

Figured it would bounce huge after coming down near the 50 level.... Probably going to test the highs, possibly make new highs and head toward 90-100. I hope it does, because this is going to be one of the best long term investments ever, there's no other way to look at it. Russia is going to be really strong this century. As will China. Ruble, Rupee , South African Rand all on my radar for long term investments.

Crippling sanctions and an oil bear market, interest rates at 15% and you think Russia will be doing good?

Well if you want to try to catch a falling knife then by all means try, but be ready to get bloodied in the attempt

Didn't say I'm buying Russia now. I'm saying it's something I will be watching closely and am prepared to start putting funds into Russia when the time is right (which isn't here yet)

I suppose all the bad news are already priced in and we will not see RUR falling anymore. The effect of devaluation will give a positive impetus to the economy so this autumn will be waiting for a production growth.

Looks like USD/RUB will explode higher from here, weekly volume is bullish, oil prices look to decline big from here as well, should support.

In so far as Ukraine and Russian sanctions are concerned, there is an enormous development today that appears to be getting minimal coverage due to other events: http://sputniknews.com/europe/20150220/1018531264.html

The military leadership of all sides today, for the first time, signed off on an actual map/coordinates and step by step plan to implement the withdrawal of heavy weapons (essentially an exact plan on which territories will remain under the control of which side, since it is impossible to have offensive operations without artillery support).

This plan has been signed by Ukrainian Mayor General Aleksandr Rozmaznin, Russian Lieutenant General Aleksandr Lentsov, and separatist leaders of DNR/LNR Igor Plotnitskiy and Alexander Zakharchenko. Ukrainian Minister of Defense has confirmed the signing as well. All areas are reporting significant decrease in hostilities.

P.S. In so far as the recent fighting in Debaltsevo, it appears that the west has decided to overlook that fighting and not register it as separatists/Russia having no intention to abide by Minsk II agreement. The fighting appears to have been brought up by Poroshenko and Putin's irreconcilable disagreement on the control over that territory during Minsk II talks, which appears to have ended in both sides agreeing to resolve that specific disagreement by force and see who emerges as the winner. There still appear to be some disagreement over Peski. Although I don't exclude the possibility of hostilities resuming in Peski, I don't think this will necessarily happen (we will see for absolutely certain in literally the next week).

Since it is highly unlikely that either side will resume offensive operations after the signing of this agreement, I think we can clearly foresee what the prospect of unanimous European sentiment to extend economic sanctions past July would be like.