If oil drops to $40, the authorities will limit their response to an emergency interest-rate increase, avoiding harsher measures such as capital controls and the state takeover of banks, a majority of economists said.
The ruble will weaken to 65 against the dollar by year-end if oil drops to $40 per barrel, according to the survey. Such a move would also prompt the central bank to spend 15 percent of its reserves on currency interventions, it showed. Significant threats to the ruble are the expectations for US key interest rate.
“A temporary drop in oil to $40 per barrel would obviously hike short-term volatility,” said Daria Isakova, an economist at Otkritie Capital in Moscow. “But once the oil price returns to the 55-60 level, the ruble will also stabilize near its true fundamental value.” The exchange rate of RUB 65 / 1 USD is associated with a decline in oil price and parallel lifting of theinterest rates by Fed.
Today The Central Bankof the Russian Federationcut the key rate (as expected) by 0.5% from 11.5% to 11.0%, at the June inflation of 15,3%, with Inflation target of 7% for July 2016 and 4% for 2017. The next meeting is planned for September 11, 2015.