Weak ruble poses concern for hryvnia

Макроэкономика 29.05.2015 After a nearly three-month bull market for the Russian ruble, the trend began to reverse over the last two days. RUB was down 1.47% yesterday and 5.45% over past week. As a reminder, from early February and through May 25th the ruble appreciated 38.9% in nominal terms and up 44.9% in CPI-based real trade-weighted terms. Factoring in the severe devaluation in December-February, the ruble's rebound was all the more significant, particularly as Russian authorities capitulated in the face of high inflation. To fight it, they opted for currency appreciation. This strategy worked as inflation in Russia reportedly slowed to 16%. Should this new trend (of ruble decline) continue, the Ukrainian hryvnia could be under pressure to weaken too.