Putin's recent approval rating has dropped to 65.6%, reflecting ongoing economic challenges and increasing internet restrictions. The market contract regarding Putin's potential exit from the presidency by June 30 has seen a slight uptick, now sitting at 3.7% for a 'YES', compared to 3% previously.
The decline in approval ratings alongside economic contraction raises the stakes for the Bank of Russia, which may face growing pressure to lower interest rates further. Market participants are keenly observing the upcoming Bank of Russia decision in April, following the significant rate cut of 14.5% recently; however, expectations for immediate changes remain low. The market surrounding the possibility of a leadership transition has seen a minor increase, reflecting limited optimism about an imminent change.
Understanding the significance of this situation is crucial for investors. Trading volumes linked to Putin’s potential departure remain relatively low, with an average of $337 in USDC changing hands daily. This indicates that the market is particularly sensitive to smaller trades, meaning that the recent shift from 3% to 3.7% may not represent a substantial shift in overall sentiment.
Investors should stay alert for economic conditions and internet restrictions, as these factors introduce internal pressures, yet they currently do not indicate a high likelihood of political upheaval. At the current rate of 3.7%, a YES share offers a payout of $1 if Putin leaves by June 30, which amounts to a potential return of 27 times the initial investment. For such a wager to make sense, investors need to anticipate significant changes within the next 67 days. Observing official announcements from the Kremlin or adjustments in the Security Council could provide insights into the actual level of political stability in the region.