The ruble is preparing for a new round of weakening: forecast for the end of summer
The Russian currency exchange rate will face a new wave of pressure as early as the end of this summer. After a brief technical correction in July, fundamental factors are once again working against the ruble, and the dynamics of the USD/RUB pair indicate a return to June highs.
July correction: a temporary respite
July brought some relief to the ruble after the crash in June, when losses amounted to up to 10%. This month, we observed a pullback of 3–5% in major currency pairs. However, in my assessment, this was merely a technical correction, not a trend reversal. The structure of the movement indicates that in the coming weeks, the dollar, euro, and yuan will resume strengthening, while the ruble will continue to weaken.
Key targets for the end of summer
Based on the current balance of supply and demand in the foreign exchange market, I highlight the following target levels:
- US Dollar (USD/RUB) — a return to June peaks and a test of the 80 ruble mark and above;
- Euro (EUR/RUB) — movement towards the 90 ruble area;
- Chinese Yuan (CNY/RUB) — approaching the 12 ruble level.
Fundamental drivers: seasonality and the budget rule
The ruble exchange rate today is determined by the ratio of flows from exporters and importers. Demand for currency from importers is growing, while supply from exporters is stagnating. Additional pressure is created by currency purchases under the budget rule — this exacerbates the imbalance, shifting it towards demand exceeding supply.
The seasonality factor is particularly noteworthy. August is historically the weakest month for the ruble. Imports traditionally increase during this period, boosting demand for foreign currency, while export flows slow down. This leads to a reduction in currency supply on the market and, consequently, to a rise in exchange rates.
What should investors do?
Against the backdrop of the expected weakening of the ruble, I recommend considering several strategies for protecting savings:
- Direct purchase of currency or futures on it;
- Currency bonds — as exchange rates rise, they not only appreciate but also generate coupon income.
As for the launch of the digital ruble, scheduled for September 1, this event will have no impact on the national currency's exchange rate. The digital ruble is merely a new form of circulation, not a new monetary policy tool.
My conclusion: The market is pricing in an August weakening of the ruble as a highly probable scenario. Investors should hedge risks in advance using currency instruments, especially against the backdrop of seasonal imbalance and budget purchases. Ignoring this trend could lead to a loss of purchasing power for ruble savings.