Russian Rouble Gains Ahead Of Central Bank Meeting

 Russian Rouble Gains Ahead Of Central Bank Meeting

Russian Rouble (RUB) Gained 1.6% Ahead Of Central Bank's Meeting

Just a few days ago, the Russian Rouble (RUB) was on the back foot as it even crossed the 101 support. But now, it appears that the RUB has gained the upper hand as Tuesday's trading session continues. For the most part, the investors believe that the Russian central bank will raise interest rates that will lend support to the RUB.

On account of this forecast, Russia's Rouble (RUB) gained 1.6% during Tuesday's session. This gain was prominent as the Russian currency has already lost 20% of its value against the US Dollar in the last few years ever since the Russian-Ukraine war.

RUB Trades Near 104.92 Against Greenback

The RUB was last seen trading against the US Dollar near 104.92 and around 13.15 against the Chinese Yuan. Overall, the outlook for the RUB is positive, but that could change very soon if the forecast for a rate hike doesn't turn out to be true.

Russia's central bank meeting is also going to happen on Tuesday when the officials will decide on interest rate policy. For now, the interest rate in Russia is hovering at 8.5%, which is already quite high.

According to an expert from Sber Investments, the interest rate in Russia will be raised to 12% at the meeting. This decision from the Russian central bank will help the RUB to achieve more reasonable levels in the FX market.

If we look back, Russia's central bank raised the interest rate in February 2022, which was considered an emergency. At that time, the interest rate in Russia was raised to 20% and was followed by the Russia-Ukraine war. Since then, the central bank has been lowering the borrowing cost steadily.

However, the bank now faces a dilemma as inflation is on the rise, and the RUB is also losing ground against its peers. In this situation, the bank may be forced to switch from rate cuts to rate hikes once again.

According to Maxim Oreshkin (Economic advisor of Putin), the Russian central bank can normalize the RUB and the inflation situation by using the tools at its disposal.

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