Russian Ruble: 6-12 Month Outlook

Russia's Q1 current account came in at 4.38% of GDP. Additionally, around 45% of external debt out of USD556.2bn has to be repaid or rolled in less than 2 years. With reserves at USD358.3bn, this could potentially take 70% of FX reserves. 

"A risk to our view is a significant increase in external debt. Based on CBR's estimates, external debt slightly increased by USD0.3bn from March to June. In the long term, we believe RUB will experience gradual appreciation against USD as its fundamentals improve", according to RBC Capital Markets.

Despite a slight increase in June, headline inflation has been declining. Inflation has been at 0% w/w for the past 2 weeks. Market consensus forecasts real GDP y/y has bottomed in Q2 and may turn positive in 2016, notes RBC Capital Markets.