Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 25 Jun 2026 by Evgeny Gavrilenkov

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In recent weeks, the ruble shifted from the USD/RUB 70-72 range seen at the end of May and earlier this month to USD/RUB 74-76. This healthy correction came amid expectations and the actual reopening of the Strait of Hormuz. As a result, oil prices fell, with Brent dropping from $95/bbl at the start of the month to $74/bbl this week. The Urals blend price slid from around $90/bbl three weeks ago to below $60/bbl recently, reflecting a growing discount on Russian oil. This may also be due to increased Russian oil exports in recent weeks, likely for various temporary reasons. Overall, FX supply in the local market will probably decline, and further ruble depreciation seems likely and healthy. Still, the geopolitical situation remains tense, with local investors worried about a potential escalation of the conflict with Ukraine, weighing on FX market sentiment. Last week, the CBR disappointed markets by cutting the key rate by just 25 bps instead of the expected 50 bps. It also signaled that inflationary pressures could rise again and that future rate moves will depend solely on fundamentals and actual data. Market participants concluded that room for further cuts has narrowed, mainly due to budget policy changes that now project a structural balance no sooner than 2029. These changes were seen as a sign of higher-for-longer rates and increased Minfin borrowing. Consequently, yields on long-term OFZs jumped by 60-70 bps, forcing Minfin to cancel this week’s primary placements. It may take several weeks to months for the bond market to find a new equilibrium. The CBR’s latest rate decision was backed by Rosstat’s new weekly inflation data, which showed a 0.25% rise w-o-w fo...