The ruble is preparing for a new round of weakening by the end of summer — my analysis
After a brief technical correction in July, the Russian ruble is on the verge of another wave of weakening. My calculations and analysis of market data indicate that by the end of summer, the national currency's exchange rate could return to June lows and even surpass them.
The July stabilization, during which the ruble recovered 3-5% from its June drop of 10%, was only a temporary respite. This is a classic technical correction before the trend continues. The fundamental factors determining the exchange rate are currently not in the ruble's favor.
Key targets for the end of summer
Based on the current balance of supply and demand in the foreign exchange market, I expect the following target levels:
- US Dollar (USD/RUB): A return to the 80 mark and above, with the potential to test new highs.
- Euro (EUR/RUB): Consolidation around 90 rubles.
- Chinese Yuan (CNY/RUB): Movement closer to 12 rubles.
Factors pressuring the ruble
The main imbalance is driven by the structure of the trade balance. Demand for foreign currency from importers is steadily growing, while supply from exporters is stagnating. This creates a persistent excess of demand over supply.
Separately, the seasonal factor should be highlighted. August is historically one of the weakest months for the ruble. During this period, there is traditionally an increase in import purchases and a decline in export revenues, which further pressures the exchange rate.
Strategy for investors
In anticipation of the ruble's weakening, I see several rational strategies for protecting capital:
- Direct purchase of foreign currency (dollar, euro, yuan) or futures on them.
- Foreign currency bonds: As foreign exchange rates rise, they will not only generate coupon income but also increase in price.
As for the launch of the digital ruble, scheduled for September 1, this event, in my opinion, is purely technological in nature. The digital ruble is merely a new form of money, not a new monetary policy tool. Its introduction will have no direct impact on the exchange rate of the national currency.
My comment: The market is currently pricing in a quite logical scenario. Until the structure of foreign trade changes or new signals emerge from the Central Bank and the Ministry of Finance, pressure on the ruble will persist. August is traditionally a difficult month, and the current macroeconomic conditions only reinforce this historical pattern.