USD/RUB: Ruble to face pressure through 2022 – Commerzbank

As economists at Commerzbank note, USD/RUB and EUR/RUB exchange rates do not exist in the normal sense when the Russian Central bank itself cannot transact in USD or EUR. Their forecasts are ‘symbolic’ to reflect that the effect of sanctions will unfold over multiple years and is unlikely to be adequately priced-in already.

RUB is no longer a freely convertible currency

“USD/RUB and EUR/RUB exchange rates no longer exist in the normal sense, when Russia's central bank, itself, cannot transact in USD or EUR.” 

“The ruble is no longer a freely convertible currency, hence exchange rate numbers which we observe on our screens are a moot point. Granted, CBR still tries to produce a fix which attempts to better guide towards a balance between demand and supply of FX, but this is not really a market-driven exchange rate.”

“Our symbolic forecasts for the ruble are significantly weaker than today’s levels in order to portray that we see the impact of sanctions playing out over a much longer period of time, which is unlikely to be adequately priced in today (we do not think it will resemble a one-off shock pattern, where the maximum impact occurs immediately, followed by recovery over the medium-term).”