Russian ruble is ending Q2 and 2H 2023 near its lowest values since March 2022. Yesterday, on June 29, the USDRUB pair traded at 87.5, EURRUB – at 95.1 and the yuan – at more than 12. Fx analysts agree that the continuation of ruble’s freefall is caused by increased specualtions and the capital outflow from the country. In this respect, it looks likely that the ruble may drop against the dollar to 90.

The trading volume of dollars with the next day delivery grew to more than 111 billion rubles. The trading volume of the yuan reached Rub142 billion. The demand for both currencies peaked in the first hour of trading on Thursday.

According to CBR’s board member Alexei Zabotkin, who addressed media questions at a press conference in the city of Novosibirsk,« …we do not see any risks [of the current ruble weakening] to financial stability, but, of course, the ruble exchange rate dynamics will be taken into account at the next meeting of the Board of Directors on the key rate in terms of clarifying the impact of the exchange rate on the dynamics of inflation this year».

Meanwhile, the USD itself is gaining momentum as the U.S. economy showed much stronger-than-expected growth in the first quarter than previously thought. A big upward revision was released Thursday by the Commerce Department.

U.S. GDP rose 2% on an annual basis from January to March, up from a previous estimate of 1.3%. That was above the Dow Jones consensus estimate of 1.4%. This was the third and final estimate of GDP for Q1. The growth rate was 2.6% in Q4 2022. The upward revision helped tone down widespread expectations that the U.S. is headed for a recession.

Earlier this month, after 10 straight rate hikes, Fed policymakers opted to leave the policy rate unchanged at the 5%-5.25% range to give time to assess the still-to-come impact of rate hikes to date and from credit tightening stemming from the banking stresses that emerged in March. However, after the recent buoyant data, rumors abound that the Fed may resume a higher pace of its rate hikes, making U.S. bonds even more attractive as a capital protection tool. “Inflation pressures continue to run high, and the process of getting inflation back down to 2 percent has a long way to go,” Fed Chairman Jerome Powell said yesterday, on June 29.