Today Russian currency has broken the historical minimums and the USD/RUB pair reached the price of 81.82 at the time of closing. Although the head of the Central Bank of Russia, Elvira Nabiullina stated that “current level of the USD/RUB pair is fair and there is no threat to financial stability”.
Let us remind that the Central Bank of Russia is between two fires. On one side, falling national currency brings the growth of inflation, considering that Russia imports quite a lot of goods. On the other side, growing national currency will bring the inflation down, however it will mean the failure to implement the budget. So there is a choice either to fill the budget or stop inflation. And the Central Bank of Russia together with Russian government are obviously choosing to fill the budget. Therefore a further drop of Russian currency can resume without any active interference of the RBC, as the Oil is clearly looking south.
We keep waiting for breaking the short term downstream channel for Euro and will be selling the pair on pullback after breaking:
The price has broken the upward sloping channel and has returned back to it. We will try selling the index at a current rate.
There is an interesting picture for the USD/RUB pair: if we look at the weekly chart, it becomes clear that the price has broken the upward triangle. If we take the height of the broken triangle, our target for the broken figure will be 94.00.