Here’s what moved markets last week.
Ruble: Depreciation Continues
The USD/RUB exchange rate breached 85 RUB. If this level holds firmly, the next target is 87 — and potentially even 90 in the near term. However, it’s too early to confirm such a move. The EUR/RUB rate rose nearly 3% last week and now trades near 99. A short-term move toward 100 is realistic. Meanwhile, CNY/RUB has already surpassed 12.5, opening the path toward 13.
Medium-term (up to one year), there’s a strong likelihood the trend may reverse. Long-term, however, the market has remained structurally bearish on the ruble.
What’s driving continued depreciation?
- Sanctions. Last week confirmed U.S. approval of so-called “hell sanctions” against Moscow. Europe has now joined the U.S. in imposing new restrictions.
- Lack of foreign currency supply. This was confirmed by the Central Bank of Russia in its latest Financial Market Risks Review.
- Import growth continues. Data remains highly retrospective, but June import volumes rose over 7% to $30.8 billion, while exports grew by just over 0.5%.
Geopolitical tensions — especially around strategic chokepoints — also weigh heavily on sentiment.
Equity & Commodity Markets
Equity markets turned lower. Last week, the MOEX Index fell 6.4% to 2,115 points. The 2,300-point resistance level was not breached, despite strong bullish attempts.
By sector, Metals & Mining posted the steepest decline — nearly 9%. Oil & Gas, Power Generation, and Chemicals & Petrochemicals each dropped more than 7%. Financials underperformed the broader index but fared relatively better — down 3.3% for the week.
Global Developments
The Strait of Hormuz remains at an impasse: Iran insists on asserting control, while the U.S. rejects any such arrangement. Daily tanker attacks continue, sustaining elevated oil prices.
Last week brought three major oil market reports — from OPEC, the International Energy Agency (IEA), and the U.S. Department of Energy. All point to a current supply deficit of ~2 million barrels per day — a significant shortfall.
Longer term, oil prices are expected to decline, driven by weakening global demand and gradual restoration of supply.
Gold remains near $4,400 — rebounding from the $4,000 support level. I’ve increased my portfolio allocation to gold, anticipating further long-term upside.
FAQ
Why is the ruble weakening against the dollar?
Main drivers include expanded U.S. and EU sanctions, declining foreign currency supply, rising imports, and persistent geopolitical risk.
Is the oil price rally sustainable?
Short-term: yes — due to ongoing Strait of Hormuz disruptions and a 2 million bpd supply deficit. Long-term: downward pressure expected from falling demand and supply recovery.
What’s the outlook for gold?
Gold has rebounded from $4,000 to ~$4,400. Structural inflation, monetary uncertainty, and safe-haven demand support further long-term gains.
