Russian Ruble: Hawkish central bank and limited FX impact – Commerzbank
Commerzbank’s Michael Pfister notes that the Russian Central Bank surprised markets by cutting rates only 25 bps to 14.25%, instead of the 50 bps expected, signalling a hawkish stance and caution on further easing. However, he argues this offers little support for the Russian Ruble (RUB), given capital controls, indirect pricing via Chinese Yuan (CNY) and US Dollar (USD), and the dominance of war and energy shocks for RUB performance.
Hawkish cut fails to lift RUB
"Instead of cutting rates by 50 basis points, they were cut by just 25 to 14.25%, accompanied by a statement that a decision on whether to implement further rate cuts would first have to be made at forthcoming meetings. This was thus a strong hawkish signal."
"As expected, this did little to help the rouble. If the rouble were a freely tradable currency, such a signal would have triggered a rally despite considerable political pressure."
"But the rouble is no longer freely tradable; it is now quoted solely via indirect links through the CNY-RUB and USD-CNY exchange rates."
"Consequently, even if the central bank were to halt interest rate cuts in the near future, it would do the currency little good. As no real capital inflows are possible, market participants find it difficult to benefit from the higher interest rate, and the rouble cannot appreciate either."
"The rouble only appreciates when there are prospects of an imminent end to the war (coupled with the hope that sanctions will be eased), or in the event of a significant energy price shock, as we have seen in recent months. Monetary policy cannot change this."
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)
Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.
You may also like
The AI boom may follow the path of the 19th-century railway bubble, and builders may not be the ultimate winners
Goldman Sachs analyst Bobby Molavi compared the current situation to the 19th-century British railway mania: 500 companies spent more than the nation's annual income building 8,000 miles of railway, with most early investors losing out, while the real beneficiaries were the later "passengers." He pointed out that the current AI craze is driven by both debt and momentum, and that the S&P 500’s forward P/E ratio of 18x is only "a bit cheaper." Whether the builders can retain value is uncertain, and history does not offer an optimistic answer.
If Anthropic's IPO goes smoothly and the stock price rises next week, then everything remains the same for AI. Otherwise, some companies will go bankrupt.
The shrinking valuations of two major giants have triggered a chain reaction—investors are adopting more conservative revenue multiples for AI startups and are directly halting high-valuation financing for companies with zero revenue. Multiple venture capital firms have advised their portfolio companies to lower valuation expectations and to quickly build up cash reserves. Market participants warn that the outcome of Anthropic’s IPO will be a barometer for the industry: if successful, the boom will continue; if it fails, some companies may face elimination.
After the Brazilian election, political discount deepens; Morgan Stanley remains bullish on Petrobras (PBR.US), focusing on fuel pricing and dividends
Morgan Stanley still maintains its most optimistic "Overweight" rating, but has lowered its year-end 2027 target price from $31 to $25.
Corning (GLW.US) receives initial "Buy" rating from Jefferies! AI factories driving a fiber optic rush, with a potential global supply gap of up to 30%
For Corning, the recent profit growth mainly comes from the expansion of AI clusters. As the number of optical links crossing cabinets and campuses increases, customers need to deploy more optical fibers within limited conduit and cabinet space, thus driving demand for high-density optical cables and connection systems.
Crypto prices
More
