USD/RUB holds positive ground near 96.60, eyes on Bank of Russia’s interest rate decision

• USD/RUB gains ground near 96.60 amid the weaker USD.
• Russia’s economic development ministry has revised its inflation projection for this year from 5.3% to 7.5%.
• The Bank of Russia’s interest rate decision will be in the spotlight on Friday.

USD/RUB holds positive ground around 96.60 during the early European session on Thursday. The Bank of Russia interest rate decision on Friday will be in the spotlight and it might trigger the volatility in USD/RUB. Market players anticipate the Russian central bank to raise additional rates.

Russia’s economic development ministry has revised its inflation projection for this year from 5.3% to 7.5%, according to TASS, citing a document from the administration. The expected increase in Russia’s inflation rate occurred only hours after Putin spoke about the country’s economy at the Eastern Economic Forum in Vladivostok, Russia’s far easternmost city.

On Tuesday, Russia’s President Vladimir Putin commended the central bank for keeping inflation under control with double-digit interest rates and stated that there were no insurmountable obstacles to limiting the Russian Ruble’s volatility.

Russian Inflation accelerated to 5.15% annually in August, exceeding the target of 4%, and analysts anticipate that the Bank of Russia will raise rates again on its Friday meeting, per Reuters. It’s worth noting that the Bank of Russia increased the interest rate by 350 basis points (bps) to reach 12% on August 15 to stop the depreciation of the Ruble and limit price increases.

On the US dollar front, the markets anticipate that the Federal Reserve (Fed) will leave interest rates unchanged at the FOMC meeting next week. Nonetheless, the data suggest that the Fed should be on the watch for a rise in inflation in the coming months. According to the CME Fedwatch Tool, 97% of investors foresee the September interest rate to remain unchanged at 5.25 to 5.50%. However, the odds of a rate hike at the November meeting rose to 49.2%.

Looking ahead, traders will focus on the US weekly Initial Jobless Claims, the Producer Price Index (PPI) and monthly Retail Sales due later on Thursday. The attention will shift to the Bank of Russia’s interest rate decision. These figures could give a clear direction for USD/RUB. Also, the headline surrounding Russia’s war in Ukraine remains in focus.