RUB: Fundamentals turning weaker – Commerzbank

While US intermediation to end Russia’s war with Ukraine have kept hitting a dead end, there is a noticeable downturn taking hold in the Russian economy for the first time since sanctions were imposed, Commerzbank's FX analyst Tatha Ghose notes.

USD/RUB and EUR/RUB to steadily trend up

"The manufacturing and services PMIs have fallen to well below 50, institutions such as the IMF have recently revised GDP growth projections lower to worse than 1% (2024: 4.3%) and oil and gas revenue is shrinking rapidly, which affects the fiscal deficit."

"And since the central bank (CBR) has begun to cut interest rates to counter these developments, all macroeconomic fundamentals now point towards a weaker exchange rate. We forecast USD/RUB and EUR/RUB to steadily trend up. "