OREANDA-NEWS. December 01, 2009. Due to both internal and external causes, ruble appreciation halted in the week ended 27 November, and reversed course. The price of the bi-currency basket increased by 3.2% reaching 36.36, with the RUB/US ratio hitting 29.2, which was +3.5% higher than it began the week, reported the press-centre of OTKRITIE Financial Corporation.

CBR currency interventions, reflected in the growth of Russian international reserves, helped stifle ruble appreciation and a de-stimulation of carry traders. CBR Deputy Chairman Alexey Ulyukaev announced that the bank would be more active with its interventions and would purchase foreign currency as it sees fit, likely at levels that the market will find difficult to predict. Its interest rate policy will have the same goal (see our flash note dated 25 November). On the international front, the turmoil in Dubai seems to have provoked capital outflow from emerging markets. The ruble sank hard on Friday, depreciating by 2.4% against the basket and by 3.2% against dollar.

View: We regard ruble depreciation as positive for the economy as a whole, though not necessarily a boon for all economic sectors. We applaud CBR’s more aggressive policy approach. Of course, the notion that ruble appreciation will be halted via a crisis in emerging markets is unlikely to be beneficial for Russian financial markets.