According to analysts at Nordea Markets, the dynamics of the Russian currency are influenced by a number of factors, such as oil price changes, the sentiment on global markets, the perception of sanctions risks etc., which can outweigh the seasonality components of the RUB in all periods.
Key Quotes
“In the first quarter, the positive seasonal effect tends to smooth the impact of possible negative factors or to contribute to the strengthening of the RUB in times of a neutral external environment. Conversely, in the fourth quarter risks for the RUB shift moderately towards weakening. May, August and November were the weakest months for the RUB over the past 15 years.”
“It is also worth noting that the RUB has historically been weaker in the second half of the year vs the EUR. Seasonally, the fourth quarter is hardly the best timing for accumulating FX liquidity ahead of the seasonally strong first quarter.”
“Our analysis has not confirmed the widespread opinion that there is a clear negative seasonality effect on the RUB in the second and third quarters. Thus, our current RUB forecast of 63.5 vs the USD and 73.7 vs the EUR on a 3-month horizon still has a chance of materialising.”
“Taking into account the rising global growth concerns and the fact that the Russian currency historically has been weaker in the fourth quarter than in other periods, the probability of our current year-end forecast (62.5 vs the USD) materialising decreases. The forecast vs the EUR (74.4 at the end of the year) still looks realistic. As in March we still believe that demand for Russian assets from foreign investors is the main support factor for the RUB.”
“The escalation of the US-China trade tensions since the beginning of May and a possible further deterioration in risk sentiment significantly change the external background for the Russian currency relative to our March forecast, when the probability of a trade deal between the US and China seemed relatively high.”
“The RUB, which has so far remained resilient to increased external risks, is becoming more vulnerable. Quite significant risks are concentrated in June ahead of the possible meeting between the US and Chinese leaders at the G20 summit on 28-29 June. Until then the parties may well continue to exchange mutual threats. In case of a return to the negotiating table after the G20 summit, the RUB outlook may improve in line with other risky assets. But a negative outcome of the meeting or no meeting at all is also possible. Depending on the outcome of this potential meeting, our current RUB forecast may be revised.”
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