Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 14 May 2026 by Evgeny Gavrilenkov
About a week ago, the Ministry of Finance announced that from May 8 to June 4 it would allocate R110 billion from oil-and-gas revenues to buy FX and gold on the domestic market, in line with the fiscal rule. The Government had originally planned to return to the market in July, but moved the date up to May. Investors thought this could slow the ruble’s rise amid strong export earnings. However, the announced amount was far below expectations of around R300 billion. Minfin attributed the smaller sum to large “compensation payments” to refined oil product producers in April, totaling about R207 billion. The news of reduced FX/gold purchases pushed the ruble below the USD/RUB 74 mark. Since May 1, the compensation mechanism has changed, and Minfin might boost purchases by 2-3 times in June, which could lead to some weakening of the ruble. The OFZ market remains trendless after the CBR meeting in April. Market participants interpreted the signal from the regulator as moderately negative and were unwilling to massively increase the exposure in the long end of the curve. Low inflation prints during the last several weeks didn't change the situation. As a result, the spread between long-term papers and the key rate turned positive (around 10-20 bps). If it widens to 50-100 bps, then it will make government bonds a "no-brainer" investment for commercial banks (as their cost of funding traditionally stays below the policy rate). At the same time, we expect the CBR to continue cutting the rate in the summer, and the OFZ yield curve will move down. Because of national holidays, Rosstat has postponed the release of April inflation data to May 15, when the most recent weekly inflat...

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