The Ruble sell-off could be overdone warn Barclays, accommodative global monetary policy likely to support monetary policy
- Category: Russian Ruble
- Published on Monday, 25 June 2012 11:50
- Written by Will Peters
We see the weakness as overdone and recommend RUB longs" - Barclays.
The Ruble (Currency:RUB) could be over-sold at current levels says a quarterly FX note from Barclays.
The note warns that the Ruble, and a host of other 'commodity currencies' are likely to find support from accommodative global monetary policy going forward. A glance a the latest spot rates: 1 GBP = 51.6052 RUB -0.17481 (-0.338%) and 1 RUB = 0.0301 USD +0.00001 (0.049%).
In a quarterly note to clients, Barclays say:
"We expect global monetary policy to remain accommodative along our muddle-through scenario, and therefore commodity supportive (see Theme commodity currencies). Furthermore, these currencies are likely to trade at a premium given their strong sovereign balance sheets built during years of bonanza.
"The oil price fall has prompted a large RUB depreciation, which by our estimates is larger than past betas would
suggest. We see the weakness as overdone and recommend RUB longs."
Turning to today's market action, it has been a quiet, albeit lower, morning in Europe with limited data to distract the market looking ahead to the EU Summit on 28-29 June.
"We expect the summit to yield more strong rhetoric in support of a roadmap towards fiscal integration, rather than the end point itself, with the significant preconditions to be reached along the way stressed. This is likely to disappoint those in the market looking for bold moves such Eurobonds. However, as the dialogue progresses, risk positive headlines may occur," Say Barclays.
For this reason like being short the EUR against other European currencies rather than the USD. For those wanting to buy the USD, we prefer to do so against the JPY.