FX.co ★ Russian Ruble Pulls Back from Rally

The Russian ruble depreciated to 85 per USD, down from the nearly two-year peak of 81.7 reached on March 18th. This decline occurred as investors reassessed the likelihood of the United States facilitating Russia's re-entry into global financial markets. Following a conversation with US President Trump, President Putin did not acquiesce to all US proposals in a ceasefire arrangement, tempering earlier expectations that an agreement could lead to peace with Ukraine. As a result, investors scaled back their prior enthusiasm for Russian securities, which had been fueled by the possibility of the US restoring Russian assets to global financial markets and reviving economic relations with Moscow. Furthermore, the ruble faced additional pressure amid concerns that the Kremlin might further ease capital controls to devalue the currency. This potential devaluation is particularly concerning given that falling energy prices exacerbate the shortfall in budget revenues often associated with a stronger ruble. On the monetary policy front, the Central Bank of Russia (CBR) maintained its policy rate at 21%, as anticipated, while adopting a slightly positive outlook on disinflation.