Good news provides solid support for both crude prices and the Russian currency. Nowadays, all Russian nationals even those who have nothing to do with the economy are aware that oil and the ruble are closely interrelated. Being a commodity currency, the ruble is very sensitive even to minor changes in crude prices. The “twins” are closely linked for the obvious reason. Crude and gas are the only valuable commodities that Russia produces for export. Therefore, the ruble is logically pegged to oil. That is why the Russian currency was badly hurt by a protracted slump in global crude prices. However, the recent developments are bringing some good news.
Amid growing oil prices, the Russian currency rose sharply to highs that were hit at the end 2015. In mid-April, the USD/RUB pair strengthened below the psychological level of 66 on the Moscow exchange. The Russian ruble also gained ground against the single European currency. The EUR/RUB pair overcame the level of 75 and declined to 74.84. Traditionally, the ruble received a boost from a surge in crude prices.
Importantly, commodity experts recognize that uncertainty about oil prices has not disappeared. To sum up, in January, the ruble hit historic lows against the dollar trading at 85.99 rubles per dollar. Since then the ruble has appreciated by 23%. This was accompanied by the rise in oil prices from $28.21 per barrel of Brent in mid-January to $41.69 for April 11. Some hedge funds and major banks such as JP Morgan Chase, Danske Bank, and Goldman Sachs increased bets on the ruble strengthening to the highest level since February 2013 by the year-end. On the other hand, optimism about the prospects of the Russian currency is not shared in regular Bloomberg polls. Besides, weakening of the ruble is allowed for in the baseline scenario of the World Bank.
