© Reuters.

(Bloomberg) — A rebound might be in sight for the after three straight months of losses.

The currency of the world’s biggest energy exporter is one of the worst performers in emerging markets in the period, even as oil rebounded by almost 30%, prompting analysts at Citigroup Inc (NYSE:). and Sova Capital to suggest the ruble is fundamentally undervalued.

Seasonal weakness has been exacerbated by geopolitical risks, which have fueled concern about fresh sanctions against the Kremlin. If those fears don’t materialize, the ruble could go back to trading around the 70-per-dollar mark where it ended May, the analysts said. That implies a roughly 6% appreciation from current levels.

The risk premium has formed in large part due to concern that President Vladimir Putin will intervene in neighboring Belarus where mass demonstrations are calling for an end to President Alexander Lukashenko’s 26-year rule. The recent poisoning of Russian opposition activist Alexey Navalny has also helped fuel bets that the U.S. and European Union are about to slap more sanctions on the Kremlin.

Investors in Russia have good reason to be jittery about sanctions risk — they’ve been caught out by unexpected turns in Putin’s interventionist foreign policy in the past. But James Barrineau, a veteran emerging-markets money manager at Schroder Investment in New York, argues that this time the market has got it wrong.

He’s holding onto his investments in ruble bonds on the logic that an explicit Russian intervention in Belarus is unlikely, while sanctions aren’t high on the agenda in the U.S. as it heads into election season.

“Whatever Russian influence is exerted in Belarus is likely to be exercised behind the scenes and is not likely to drive the story absent of widespread unrest that threatens to spill out of the country,” Barrineau said.

Finisterre Capital’s Damien Buchet said he has been looking for the right time to buy the currency. “The ruble was cheap at the end of July, and now it’s even cheaper.”

“When it comes to geopolitics, those headlines about Putin helping Belarus – I think it is the least he could do for a friendly country in an economic union with Russia. I’m not reading this as Russia overcommitting and confronting the West.”


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