Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 02 Sep 2026 by Evgeny Gavrilenkov

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The USD/RUB continued to slide in recent weeks, having surpassed the 87 mark and moving closer to 88. Generally the FX market entered a period of correction that followed months of an unhealthy appreciation of the currency amid increased oil prices and their high volatility The recent ruble depreciation occurred amid a relatively stable Urals blend oil prices which hovered between $80/bbl and $90/bbl. Growing geopolitical concerns, military escalation, and increased demand for imported oil products fueled demand for FX. We expect the ruble to weaken more which could be supportive for economic growth and budget revenues. However, weakening of the ruble creates risks of higher inflation as the domestic consumer market becomes much more dependent on imported goods than a few years ago. Still, private capital outflow will likely continue for the time being causing weakening of the ruble. Minfin returned to primary OFZ placements after a 1.5 month pause. Lack of demand on fixed-rate papers forced the Government to place floaters. The total amount of issuance was R1 trln (face value), while the demand reached almost R1.5 trln. According to our understanding, the main buyers were several state-owned banks. Despite the positive results of the auction, the impact on the secondary market was almost non-existent. The bulk of investors prefer to keep defensive positions and not to increase the exposure on long-term papers. As a result, the yield for 10-year bonds continued to trade above 16%. In the seven days ending August 31, the w-o-w CPI was deflationary (-0.01%), bringing MTD deflation to 0.08%. YTD inflation dropped to 4.67% as of August 31. It’s worth noting that weekly inf...