The current market bias for the RUB to USD exchange rate is bearish.
Key drivers influencing the exchange rate include:
- The Bank of Russia has set a high key interest rate of 17.5% for 2024, aiming to stabilize inflation and the ruble. However, plans to cut rates to 12.0–13.0% by 2026 may weaken the ruble further.
- The projected slowdown in GDP growth, anticipated to drop to 0.5–1.5% in 2026, suggests that economic conditions are softening, which may pressure the ruble.
- While inflation is expected to decrease to 4.0% in 2026, the long-term depreciation forecast for the ruble could outweigh this stabilizing factor.
In the near term, the RUB to USD is likely to trade within a stable range, slightly above its recent average.
An upside risk could arise from stronger than expected global commodity prices, which may support the ruble. A downside risk includes additional rate cuts by the Federal Reserve, which could lessen demand for the ruble as the dollar weakens.