OREANDA-NEWS. November 23, 2009. Deputy CBR chairman Ulyukaev stated that CBR is maintaining a RUB35-38 sub-corridor for the ruble vs the bi-currency basket, reported the press-centre of OTKRITIE Financial Corporation.

View: The ruble is currently traded very close to its upper limit of RUB35/ bi-currency basket, thus there is little space for further appreciation. However, this is a very short-term range that CBR has set, which could be adjusted in tandem with growth in CBR reserves. 

CBR monetary policy guidelines suggest an expansion of this range by RUB0.05 upon a \\\\$700m growth in reserves.  In recent months the ruble has faced substantial upward pressure from both the current account (which is likely to post ~US50bn surplus in FY09) and capital inflows. As a result, CBR bought over US 15bn in October, and already ~ US 6bn in November.

Meanwhile, we expect CBR to act more agressively to prevent further ppreciation in the near-run. That said, in its upcoming (24 November) meeting the CBR Board will very likely continue rate cuts. Given this likely scenario, as well as an expected December hike in fiscal spending (virtually double MoM), we expect a stabilization of the ruble exchange rate towards year’s end.