By Andrei Skvarsky.
Russian investment bank Renaissance Capital expects the rouble to keep weakening from now on and close at around 94.50 to the U.S. dollar in 2025 but warns there are risks the Russian currency will drop lower than that.
“We stick to our forecast for the rouble: an average exchange rate of 93.00 roubles to the dollar in the second half of 2024 and 94.50 in 2025. The fluctuations of the exchange rate are heavily dependent on non-market factors but the rate is returning to its natural trajectory of gradual weakening,” Renaissance chief economist Oleg Kuzmin told a news conference in Moscow.
Kuzmin said risks to the rouble included the average oil price falling below $60 per barrel, a revision by the Russian government of budgeted spending for 2025 to levels higher than those for 2024, and “new shocks in supply or problems with deliveries or logistics chains because of bottlenecks in freightage from the east to the European part of the country”.
There is, besides, something unfathomable about the rouble’s behaviour, according to Kuzmin.
The economist likened the currency to “a Russian bear, who wanders around, rambling now this way, now that way, so you don’t know what it’s after, though eventually it always returns to its home area, and in the same way the rouble returns to its path of gradual depreciation”.
Renaissance chief investment officer Igor Danilenko pointed out other hazards to the rouble at the same news conference. They are recent commodity market adjustments, the nature of technical factors behind the rouble and a recent rise to more than 10 per cent in the foreign currency yields of Russian bonds that makes them more attractive than rouble yields, Danilenko said.