The ruble fell below 85 per dollar - what's going on?

The ruble is continuing to depreciate.

The dollar surged to a level above 85 rubles/$ on Wednesday, the highest it has been since April of last year.

For approximately one and a half months, the US dollar has appreciated by almost 10 Russian rubles.

The trade balance has been adversely impacted by a decrease in exports and a rise in imports, resulting in a weakening of the ruble.

Promsvyazbank notes that the current movement in the foreign exchange market is partly caused by delayed demand from importers, as the holiday has limited the supply of US currency from exporters.

The Bank St. Petersburg notes that the difficult situation in foreign trade is still the primary source of pressure on the ruble. This is evidenced by the revision of the April current account from $6.8 billion to $2.3 billion. Furthermore, the seasonal increase in demand for the currency may also contribute to additional strain on the ruble.

Raiffeisenbank states that the ruble is not backed by any fundamental factors. The Central Bank's initial assessment is that the current account surplus in May was $5.2 billion. This is more than five times lower than the same period last year ($22.8 billion). The current exchange rate is mainly due to temporary factors, and if exporters resume selling their foreign currency earnings, the ruble could return to around 80 rubles/$.

Profinance believes that the trade surplus has decreased three times, and even that is likely to be deposited in bank accounts in friendly foreign countries, supposedly to pay for essential imports.

Demand for imports is expected to stay high, and there is also an influx of private capital leaving the country, as well as a large number of Western companies relocating. This all fits into the framework of the budget's requirement for a weaker ruble to cover the budget deficit.

According to Otkritie Investments, the steady weakening of the ruble is creating a risk of inflation and a loss of public trust in the national currency, which cannot be considered logical.

Freedom Finance Global predicts that the ruble will remain in the range of 80-85 rubles/$ until the end of June, while Tinkoff Investments maintains its forecast of 74-78 rubles/$ for the second half of the year.

Alfa-Bank believes that, due to the increase in inflationary risks, the Central Bank of Russia is likely to raise the rate by 25 basis points in July.