The ruble under pressure: a new wave of weakening expected by the end of summer
The Russian ruble, which experienced a significant decline in early summer, is preparing for a new wave of weakening. After a 10% collapse in June, a short-term technical correction followed in July, with the exchange rate recovering by 3-5%. However, in my assessment, this is only a temporary respite before a deeper move.
Fundamental Pressure Factors
The key driver of the ruble's weakening is the imbalance between supply and demand in the foreign exchange market. Traditionally, August is the weakest month for the Russian currency. This is due to seasonal features of the trade balance: imports rise, increasing demand for foreign currency, while exports stagnate, reducing its supply. Additional pressure comes from budget purchases of foreign currency under the fiscal rule.
My target levels for the end of summer are as follows: the US dollar will return to June highs and may exceed the 80 ruble mark, the euro will strengthen to the 90 ruble area, and the Chinese yuan will approach 12 rubles.
Strategy for Investors
Given the expected weakening of the ruble, I recommend considering several tactical decisions. Direct purchase of foreign currency or futures on it remains the most obvious option. Alternatively, foreign currency bonds represent an attractive instrument: as exchange rates rise, they not only appreciate but also generate coupon income.
It is important to note that the upcoming launch of the digital ruble, scheduled for September 1, will have no impact on the national currency's exchange rate. This is merely a new form of circulation, not an independent financial instrument.
Expert opinion: The current dynamics of the ruble are a classic example of a seasonal trend, amplified by structural economic problems. Investors should hedge currency risks but remember that after the August weakening, a period of stabilization traditionally follows in September-October.