RUB unlikely to witness volatility amid presidential election race; does not rule out uncertainties: Commerzbank

The Russian rouble is expected to not witness any volatility on account of who will win on Sunday as the country heads into its seventh presidential election since the collapse of the Soviet Union in December 1991. However, this does not mean that there are no uncertainties further out, according to the latest research report from Commerzbank.

Eight candidates will contest the race but the outcome is somewhat of a foregone conclusion – President Vladimir Putin appears all set to win his fourth term. The remaining contestants did not appear to have solid campaign plans: the TV debates among them descended into the fracas, and Putin himself declined to participate in these debates, using his address to the Federal Assembly instead as an informal campaign call.

The candidate with the second highest support – the communist party's Pavel Grudinin – had the wind taken out of his sail by a disclosure from Swiss tax authorities that he had 13 Swiss bank accounts as of end-2017. With his address, Putin positioned Russia firmly in the military sphere, with frequent references to its nuclear capability above all else; something he also promptly adopted to frame the latest dispute with the UK government.

This has implications for the rouble. Ever since events in Crimea, the major swings in Russia’s economy and the rouble have been driven by geopolitical repercussions of Putin’s stance vis-à-vis the western world, more than by any normal economic force or business cycle.

"If Putin had to choose between the economy and ‘making a point’ to the western powers, we know what he would choose – and he is doubling down on this approach as a presidential candidate," the report added.

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