Economists at UBS recommend considering geopolitical hedges, including commodities. They expect the USD/RUB to enjoy considerable gains in case of further escalations in the Russia-Ukraine conflict.

Oil prices to rise further this year

“Energy prices would likely rise in the event of a supply disruption, and regardless of the situation in Ukraine we expect oil prices to rise further this year thanks to rising demand and somewhat constrained supply.”

“Alternative ‘geopolitical hedges’ include investments in cybersecurity, given that cyber warfare between state actors could play a role in any conflict, or establishing short positions in the Russian ruble.”

“We would expect USD/RUB to reach 80-90 in the event of an escalation, but we note the risk premium incorporated in the ruble has risen to a significant extent already so such a hedge could come at a high cost if tensions ease.”

“Any further aggression in Europe could also favor a traditional safe haven like the Japanese yen over the euro.”