Saxo Bank: Oil prices' drop may have a negative effect on the manat's position

Baku. 16 January. REPORT.AZ/ Position of the Russian ruble against the US dollar in the short term may be slightly more faint. However, it is expected that the depreciation of the Russian currency will slow its pace if the price of oil on the world market will not fall below the bar $ 40 per barrel. Report was told by the head the Department of Forex strategy of the Saxo Bank John J.Hardy.

"The Ruble could weaken a bit more versus the USD in the near term, but I am expecting the currency’s weakness to slow soon unless oil prices drop under 40 dollars per barrel. Let’s call it a range of 65 to 70 in USDRUB and eventually back toward 60 in the months ahead, though with such high interest rates, the actual USD RUB should continue to rise slowly once some stability is found to reflect the difference in interest rates", J.Hardy added.

Along with this, an expert of the Saxo Bank commented on the impact of currency fluctuations on the Russian economy of Azerbaijan: " Because the Azerbaijani Manat is pegged to the US dollar, it means that a weakening ruble makes Azerbaijani products very expensive in Russia - thus a threat to Azerbaijani exports to a very large local trade partner – which is negative. On the other hand, Russian products are much cheaper after this devaluation and this could boost the standard of living of consumers".

According to J.Hardy, one negative is that, with the manat pegged to the world’s strongest currencies lately amid falling oil prices, oil revenues to the economy in local terms are falling rapidly, putting possible pressure on Azerbaijan to devalue its currency if it continues, independently of whether the ruble is strong or weak.