USD/RUB: BOR leaves rates intact pending possible US sanctions

The USD/RUB pair bounced back after the Bank of Russia (BOR) delivered its important interest rate decision. The pair rose from the intraday low of 73.52 to a high of 74.45.

Russian Central Bank leaves rates unchanged

In a closely-watched meeting, the BOR left the main interest rate unchanged for the fourth consecutive time. This decision was in line with what all analysts polled by Bloomberg were expecting. 

It also signaled that it won’t slash rates again in the foreseeable future as the country accelerates its economic recovery. 

The decision came at an important time for the Russian economy. The government is rolling out a major vaccination program to slow the spread. At the same time, inflation is rising, putting more pressure on the bank. In January, annual inflation rose by 5.2%, which is above the bank’s target of 4.0% helped by rising food prices. 

At the same time, the Russian economy has benefited from higher oil prices. Earlier this week, the price of crude oil rose above $60 for the first time since January last year. As the third-biggest oil producer, Russia benefits from high oil and gas prices. 

US sanctions are a risk

However, there are signs of more sanctions by the United States. President Joe Biden is said to be considering ordering sanctions relating to human rights and the recent hack of the US government. In a note, a Bloomberg analyst said:

The USD/RUB is also rising because of the overall strength of the US dollar. The dollar index has bounced back today, rising by 0.20% as traders buy this week’s dip. The gains started yesterday after the US published weak jobless claims numbers.

USD/RUB technical outlook

The four-hour chart shows that the USD/RUB price found substantial resistance at 76.32 last week. The pair then dropped by 3.88% to yesterday’s low of 73.53. 

Today, it rose and is trading at 74.43 that is slightly above the 78.6% Fibonacci retracement level. It has also moved above the 50-day and 25-day exponential moving averages. Still, in my view, the pair may still resume the downward trend.