EUR/RUB to continue its decline towards 77.00 – Danske Bank

Fears of Russian invasion to Ukraine have once again resurfaced over the past weeks, yet the situation has so far had limited impact on the ruble. Economists at Danske Bank continue to see downside risk to EUR/RUB, targeting 77.00 in 12 months.

RUB strength is not done yet

“Relocating troops near the Ukrainian border is nothing new compared to last spring, and thus the latest worries are a known risk.”

“With the EUR being exposed amid high energy prices and tempering expectations to the manufacturing sector, we see downside risk as noticeable in EUR/RUB and we look for 77.00 in 12M, while the outlook is more balanced for USD/RUB.”

“The Russian CB continued its hiking cycle by 100bp in December, and signalled a risk of further hikes. The CB has been supportive of RUB and will likely continue to be so into Q1. We hence see EUR/RUB as continuing its downtrend.”

“The key risks appear to be 1) a broad based USD strength and/or 2) a geopolitical event in Russia-Ukraine relations, which may take EUR/RUB towards or above 90.00.”