Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 28 May 2026 by Evgeny Gavrilenkov
Recent windfalls from oil exports have kept the USD/RUB near the 70 mark over the past two weeks. The market expects the ruble-denominated equivalent of FX purchases for the National Wealth Fund to rise in June to R250-300 bln from R110 bln in May, which could weaken the ruble by 2-3%. In the longer term, the FX market will largely hinge on developments in the Middle East. Additionally, a potential uptick in imports - driven by a strong ruble and anticipated lower key rate - could further pressure the ruble in 2H26. Despite encouraging inflation data, the OFZ market remains under strain. Investors are cautious due to the likely expansion of the borrowing program, prompted by an almost certain upward revision of budget spending, and the possible import of global inflation. The latter could shape domestic monetary policy in 2H26. Consequently, OFZ yields are edging higher, with 10Y notes approaching 15%. Conditions may shift closer to the next CBR meeting on June 19. In the week ahead, the market will be particularly responsive to geopolitical events and economic updates from the St. Petersburg economic forum, set for June 3-6. The latest weekly inflation figures confirmed that disinflation is ongoing, with a 0.07% w-o-w rate for the seven days ending May 25. MTD and YTD inflation now stand at 0.11% and 3.22%, respectively. The CBR is expected to cut the key rate by at least 50 bps from the current 14.50% at its next BoD meeting.

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