RUB: Crisis whispers on the side of the road – Commerzbank

We have long argued that the rouble exchange rate (versus hard currencies such as the US dollar or euro) is a ‘technical fix’ or artificial exchange rate. This is because Russia's central bank itself and the Moscow exchange are sanctioned against trading in hard currencies. An artificial exchange rate does not react much to fundamental news. Still, the rouble exchange rate retains some weak link to fundamentals via third-party crosses (such as CNY), where capital flows are open. There has to be broad consistency among crosses – after all, the rouble’s exchange rate versus CNY and that versus USD have to jointly imply a realistic USD/CNY rate, Commerzbank's FX analyst Tatha Ghose notes.

Possible deeper anxiety about the post-war economy

"Because of such indirect links, major fundamental shocks will definitely still impact USD/RUB. One such risk factor has been recently highlighted by Russian banking officials: a Bloomberg report cited officials warning that the country could face a systemic banking crisis within the next 12 months. This was reportedly based on deteriorating payment discipline, surging non-performing loans, and falling credit demand. While the central bank (CBR) rejects alarmist ideas, and maintains that the sector is profitable, that P&L improved as recently as in May 2025, CBR’s tone has shifted somewhat: governor Elvira Nabiullina has remarked that the high banking sector profits of 2024 cannot be repeated in 2025; CBR is acknowledging widening imbalances and has urged lenders to strengthen provisioning, improve risk management, and avoid overstretching capital so as to protect against mounting credit risk."

"The economic backdrop is turning negative too: GDP growth has already slowed sharply between 2024 and Q1 2025, with only energy and war-related sectors pushing ahead while private investment has dwindled. Within the state sector too, oil and gas profits have recently declined because of the lower oil price. Complicating the picture are sporadic remarks ‘recession’ by certain officials: for example, at the recent St. Petersburg forum, economy minister Maksim Reshetnikov warned that the country was on the verge of recession, citing a sharp drop in forward-looking indicators, stagnating real incomes, and falling investment. Nabiullina herself, as well as Russia’s finance ministry, reject this view too as an outlier – their version is that the economy is now normalising after a period of war-spending driven boom and overheating; that such a moderation can be managed using gradual rate cuts and other policies. This divergence of opinion probably reflects deeper anxiety about the post-war economy – whether the state can continue to insulate the economy from sanctions and from the predominance of the defence industry."

"One development which perhaps confirms the deeper stress is that authorities have doubled down on centralised control: the government has expanded control of strategically significant assets through nationalisation and accelerated court-enforced seizures. They may do so in order to mask company-level weakness or insolvency, but a wider banking crisis would be impossible to hide. It would be misleading for us to claim that we have any idea whether or not a systemic crisis could truly come to pass over the coming year. The idea here is to highlight to readers that the balance of risk has taken a turn towards the worse since after Q1 2025. And just to reiterate, the rouble exchange rate, however artificial and technical it may be, will depreciate markedly in the event that the situation progresses further in the direction of financial stress."