1. Exness News
  2. Market Analysis
  3. Fundamental Analysis: Ruble Bounces as Oil Gains
Market Analysis

Fundamental Analysis: Ruble Bounces as Oil Gains

March 13, 2019
BY Michael Stark

The ruble has bounced significantly from last week’s lows since Monday’s opening. Among the main factors behind this are oil’s holding very near 2019 highs and a degree of weakness for the dollar. News from Russia’s central bank has also been mostly positive.

The dollar has declined sharply this week from its highs around ₽66.50 on Friday afternoon. A significantly lower opening on Monday gave some impetus for USDRUB’s movement downward below ₽65.50 at the time of writing, a three-week low.

CBR positive and oil up

Brent crude has managed to sustain levels above $67 a barrel in today’s session so far, giving strong fundamental support to the ruble. According to the Energy Information Administration, Russia was the world’s third largest producer of crude oil for 2018 with about 11.2 million barrels per day. The country is also the second largest exporter of crude oil after Saudi Arabia. The crucial role of crude in Russia’s economy means that RUB usually tracks crude oil very closely.

The Central Bank of the Russian Federation (CBR) has also been fairly positive so far this week. The CBR’s press release yesterday noted that the cost of borrowing in foreign currency remains low and current account inflow high. It also referred to higher foreign buying of Russian sovereign bonds last month. On the other hand, the CBR made mention of somewhat less optimistic sentiment in February.

The ruble had declined significantly at the end of last week, reaching above the important ₽66 to the dollar. Given the movements of oil, though, these levels were difficult to sustain. Data provided lesser support. Inflation data were mixed last Wednesday, although the important annual figure adjusted for February met the consensus at 5.2%, higher than the previous release.

Considering the bigger picture, the carry trade remains highly supportive of the ruble. The CBR’s key rate at 7.75% is one of the highest among OECD/G20 countries. This makes the differential for USDRUB 5.25-5.5% in the ruble’s favor.

Focus on the dollar this week, but watch Russian data

The range of data from the USA in the rest of the week means that the dollar is likely to be the driver for USDRUB over the next few days. Trade and housing data from the USA are expected from 12.30 GMT tomorrow. Friday afternoon features the JOLTs release and figures on industrial production.

Traders should not ignore data from Russia, though. 13.00 GMT tomorrow is the scheduled release of Russia’s balance of trade for January. The consensus predicts a gain in trade surplus to around $19.5 billion. Coming up on Monday is the release of data on yearly industrial production.

More gains possible for the ruble

The most likely scenario according to fundamentals is a further small drop for USDRUB over the next few days. However, traders should not ignore the technical outlook for dollar-ruble. The dollar is oversold in this pair on various timeframes, so any more losses are likely to be small.

Join Exness and trade USDRUB from 7 pips’ spread!


Disclaimer: the publication of analysis is a marketing communication and does not constitute investment advice or research. Its content represents the general views of our experts and does not consider individual readers’ personal circumstances, investment experience or current financial situation. Analysis is not prepared in accordance with legal requirements promoting independent investment research and Exness is not subject to any prohibition on dealing before the release of analytics. Readers should consider the possibility that they might incur losses. Exness is not liable for any losses incurred due to the use of analysis.

Risk warning: CFDs are leveraged products. Trading them carries a high level of risk, so it is not appropriate for all investors. The value of investments can both increase and decrease and an investor might lose all if their invested capital. Under no circumstances shall the Company have any liability to any person or entity for any loss or damage in whole or part caused by, resulting from or relating to any transactions in CFDs. © 2008—2019, Exness
alternate text for image
Confident in your trading skills? Open an account and start trading with Exness