Dmitry Dolgin, ING's Chief Economist covering Russia and CIS countries, notes that Russia will prop up FX purchases by $1.3bn to $3.0bn in June, slightly higher than expected, reflecting strong oil prices and volumes in May. This puts more focus on the current account, with strong exports and low outward tourism fighting against dividends and higher imports.

"The Russian Finance Ministry announced an increase in monthly FX purchases from US$1.7bn in May to US$3.0bn in June. Our expectations, which were in the middle of consensus, suggested a more moderate increase to US$2.6bn."

"In our view, the higher-than-expected increase in the FX purchases suggests that in addition to the US$5/bbl increase in the average monthly Urals price in May, the Russian trade balance and budget may have also benefited from increased volumes of oil production and exports. Given the stronger-than-expected oil price environment and signs of faster economic recovery, our budget balance expectations for 2021 (deficit of 1.2% of GDP) now has room for improvement."

"The implications for the exchange rate, however, are not as straightforward, as the ruble is currently at the cross-roads of counterbalancing factors."

"A strong oil price environment, easing in the foreign policy tensions, continued foreign travel restrictions and benign global EM-risk mood create favourable conditions for the ruble in the near-term, regardless of the higher-than-expected FX purchases in June. Meanwhile, the dividend season, galloping imports and persistently high private capital outflow could serve as obstacles to ruble appreciation this summer. We continue to see USDRUB 72-73 levels as attractive for building up FX positions."

"The May balance of payments, to be released on 9 June, will be the next important data point to test this view. We expect a narrowing of the current account surplus amid persistent private capital outflow."