Russian ruble rally likely to fade

The Russian ruble has been the best-performing EM currency so far this year, in spite of the threat of tighter US sanctions which caused a premium to open up in February. We think that the ruble rally will reverse over the coming quarters as oil prices drop back – we forecast the ruble to fall from 63.9/$ now to 69/$ by year-end. This depreciation would be exacerbated by a further tightening of US sanctions.