According to the preliminary data by the Central Bank of Russia (CBR), real effective RUB exchange rate to foreign currencies went down by 1.4% ytd as of end of July 2013. Out of that real RUB rate lost 2.7% ytd to EUR and 3.9% ytd to USD.

The ytd decline of RUB effective rate moderated slightly from 1.5% ytd as of end of June. In July RUB effective rate gained 0.1% m/m. In y/y terms the rate increased by 2.8% y/y, up by 1.8% y/y vs. EUR and 4.1% y/y vs. USD as of end of July 2013.

Average nominal RUB/EUR rate was RUB 42.82 and RUB/USD rate RUB 32.74 in July. In Jan-July 2013 overall average RUB/EUR and RUB/USD rates were RUB 41.03 and RUB 31.24, respectively. As of June 31 2013 the RUB/EUR and RUB/USD rates were RUB 43.61 and RUB 32.89, respectively.

In Q2/13 overall real effective RUB rate lost 1.7% q/q (-1.8% q/q vs. EUR and -2.9% q/q vs. USD). In H1/13 overall real effective RUB rate remained at 3.1% y/y growth (2.5% y/y vs. EUR and 4.2% y/y vs. USD).

Data in a separate report by the CBR of last week showed that the central bank sold USD 4.18bn in currency interventions in July vs. USD 2.7bn seen in June, USD 0.24bn in May and USD 0.66bn in April. In July the central bank stepped up the currency intervention 1.5-fold m/m. The cost of the bi-currency basket (0.55 USD and 0.45 EUR) as of July 31 2013 increased by 1.7% m/m to RUB 37.87.

RUB depreciation is likely to continue due to more pronounced monetary stimulation expected from the CBR. Also, in July newly appointed EconMin Alexei Ulyukaev argued that currently there is a gap between actual and full capacity output, which allows for a production fiscal stimulation and a “quantitative easing”. These measures are going to further undermine RUB.