EUR/RUB Outlook: Bearish, as the rate is significantly below its recent average and close to recent lows, driven by geopolitical tensions and economic forecasts.
Key drivers:
• Rate gap: The European Central Bank's cautious stance contrasts with the Bank of Russia's tight monetary policy aimed at stabilizing the ruble, maintaining a higher interest rate.
• Risk/commodities: Rising oil prices above their recent average are generally positive for the ruble, yet ongoing sanctions against Russia threaten energy export revenues, putting pressure on the currency.
• One macro factor: The European Union's ban on new gas contracts with Russia is likely to impact ruble stability significantly, as reduced energy revenues could weaken the currency further.
Range: Movement in EUR/RUB is expected to hold near current lows, reflecting a lack of upward momentum.
What could change it:
• Upside risk: A resolution to geopolitical tensions could restore investment confidence and strengthen the euro.
• Downside risk: Continued economic sanctions on Russia may exacerbate the ruble's decline if energy revenues diminish further.
