(17 AUGUST 2017)DAILY MARKET BRIEF 2:Russia: Retail sales to continue growing in July

(17 AUGUST 2017)DAILY MARKET BRIEF 2:Russia: Retail sales to continue growing in July

17 August 2017, 13:51
Jiming Huang
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Russia retail sales is set to be released today. Markets estimate a slight decline from June to 1% from 1.25 in July. The ruble is strengthening against the dollar and we believe that upside pressures should likely accelerate for the ruble. Late last July, the Central Bank of Russia has decided to hold rates unchanged at 9% probably on geopolitical fears.

The diplomatic relations bet ween the US and Russia are still one key driver for the USDRUB pair. For the time being the Russian economic fundamentals are improving. The unemployment rate which will also be released today should likely remain steady at 5.1%.

We consider that the Central Bank of Russia will before year-end to normalize its interest rate and its key rate should head back towards 8%. This would avoid any strong over-appreciation of the ruble due to improving fundamentals. The next meeting will take place the 15th of September. The central bank has definitely some room devalue its currency but will definitely do it at a slow pace not to derail ongoing recovery. One dollar will likely trade against 60 ruble within the short-term.

By Yann Quelenn

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