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Ruble seen to firm up by year-end
Speculators looking to profit from ruble appreciation

The Russian ruble is expected to strengthen against the U.S. dollar by the end of the year, J.P. Morgan analysts predicted. The investment bank said in its survey that the Russian currency would climb in the next several months and increased the rubles weighting in its portfolio to above-the-market from the neutral level. J.P. Morgan recommends taking up short positions against the dollar and projects the rubles target rate of RUB 29.5.

The ruble is expected to gain in value on higher oil prices, which according to J.P. Morgan could grow to $109 per barrel in the third quarter and $105 in the fourth quarter. Faster growth in trade surplus and liberalization of the federal bond market will also be conducive to stronger ruble, according to the bank.

Other experts concur with J.P. Morgans forecast. UniCredit Bank Head of Macroeconomic Research and Analysis Artyom Arkhipov did not rule out that the ruble may firm up in the short-term, although the bank expects the Russian currency to weaken in the long-term on the back of such factors as the absence of capital inflow and slower economic growth. The ruble may strengthen by the end of the year on anticipated growth of oil prices due to excess liquidity in the global markets, Arkhipov went on to say.

BNP Paribas Senior Economist Yulia Tseplyayeva also believes that the ruble may appreciate later this year. Oil prices will support the ruble even if they remain at the current level, she added.

The forecasts issued by analysts are in line with the estimate of the Economic Development Ministry, which expects the ruble to strengthen to RUB 31.3 by the year-end. The Russian currency may ease to RUB 32.4-33.0 in 2013-2014, the ministry predicts.

The Central Bank of Russia raised the rubles official rate for September 13 by RUB 0.30 to RUB 31.48, up from RUB 32.5 as of the beginning of this year.

Research Department of RIA RosBusinessConsulting

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