The ruble has had a bad few weeks that have only got worse in the past couple of days. Yesterday, the ruble fell to 92 rubles to the euro for the first time since January 2016. Today, its exchange rate with the dollar almost reached 80. Since the start of September, the Russian currency has tumbled over 5% against the euro and 7% against the dollar.

What is causing the sell-off? Two things: geopolitical risk and the threat of a second coronavirus (COVID-19) wave.

As political unrest continues in Belarus, Western politicians demand answers about Navalny’s poisoning, fighting breaks out in Nagorno-Karabakh and the US presidential election nears, markets are worried that new sanctions may be coming Russia’s way.

Meanwhile, COVID-19 very quickly has begun to appear out of control in Russia, prompting fears that a return to April awaits.

Where will the ruble go from here? The CBR said on Tuesday that it would increase its foreign currency sales to $2bn in October in an effort to support the currency. But analysts expect this will make little difference. Neither the geopolitical risks facing Russia nor the coronavirus appear to be going anywhere in the short term.

Reports emerged yesterday that German Chancellor Angela Merkel secretly visited Navalny while he was in the hospital in Berlin. And in the US, a bipartisan group of senators have proposed sanctions on Russian officials in response to Navalny's poisoning.

Meanwhile, the EU has increased its diplomatic support for the Belarusian opposition, against Russia’s efforts. Belarus’ rightful president-elect Svetlana Tikhanovskaya, who was inaugurated in a people’s ceremony this weekend, met with French President Emmanuel Macron today and is planning to meet with Merkel next week.

Finally, the US Treasury has imposed new sanctions on Russian individuals related to cyber interference in the current election. Congressional Democrats have called for further measures in response to what the intelligence community has called an active Russian campaign to “denigrate” Joe Biden, leading markets to worry about new Russia sanctions in the case of a Biden victory.

So long as these geopolitical risks persist, there’s little room for ruble upside.

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This article originally appeared in FPRI's BMB Russia newsletter. Click here to learn more about BMB Russia and subscribe to the newsletter.