Hedge funds are positioning themselves for potential gains in Russian corporate bonds and the rouble, as speculation mounts that Donald Trump’s efforts to restore ties with Vladimir Putin could lead to a rollback of sanctions, according to a report by the Financial Times

While western institutional investors remain largely restricted from direct exposure, hedge funds and brokers are exploring sanctions-compliant ways to profit from the shifting geopolitical landscape. These include non-deliverable forwards (NDFs) – a mechanism allowing investors to take positions on the rouble’s movements without directly holding Russian assets.

The rouble has surged nearly 30% against the dollar this year, driven by optimism over a potential ceasefire in Ukraine and broader sanctions relief. Hedge funds are closely watching upcoming talks between Trump and Putin, with some seeing an opportunity to front-run potential policy changes.

While trading in Russian sovereign debt remains off-limits due to western sanctions, some hedge funds are exploring corporate bonds that were once deemed nearly worthless but are now seeing improved valuations. These positions reflect a growing belief that a Trump-Putin deal could unlock Russian capital markets, making previously distressed assets profitable.

Due to sanctions on Russian banks and financial intermediaries, direct trading of the rouble remains difficult. However, hedge funds are utilising proxy trades, including: Kazakhstan’s tenge, which has rallied 5% against the dollar this year due to its economic ties with Russia; NDFs on the rouble, which allow investors to take positions on the currency’s movement without holding it directly; and select Russian corporate bonds, which remain illiquid but have seen renewed interest as speculation about sanctions relief grows.