USD/RUB: ruble is on track for 4th weekly gains as commodities sink

on May 12, 2023
  • The Russian ruble exchange rate has jumped for the past four straight weeks.
  • Commodity prices like crude oil, natural gas, and wheat have all retreated.
  • The USD/RUB retreat will likely be short-lived.

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The Russian ruble is on track for the fourth straight weekly gains even as oil and gas prices remain under pressure. The USD/RUB exchange rate dipped to 76.58, which was a few points below the year-to-date high of 83.32.

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Commodity prices on edge

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The Russian ruble is one of the most important commodity currencies in the world because of the vast amount that the country sells internationally. Crude oil is the most important, accounting for more than 15% of the total GDP.

The price of crude oil has been in a strong downward trend in the past few months as concerns about the global economy remains. Brent, the global benchmark, was trading at $76 on Friday, ~15% below the highest point this year. In a statement on Thursday, the Russian central bank estimated that urals will average $55 per barrel this year.

Natural gas, another important Russian export, has also plunged by more than 70% from the highest point in 2022. It is now sitting at the lowest level since 2021 as supplies of both gas and liquified natural gas from the US and the Middle East has surged.

The same trend is happening in the coal industry, where prices have stabilized in the past few months. A report by Caixing noted that Chinese power producers have seen better margins helped by lower coal prices.

Agricultural products like wheat and corn have seen their prices tumble as well. All this means that Russia’s trade dynamics could continue to worsen in the coming months. The most recent data showed that Russia’s trade balance plunged to $9.1 billion in February, the lowest point since 2021.

Why is the USD/RUB falling?

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It is unclear why the USD/RUB pair has fallen in the past few weeks. A likely reason is that investors have moved into a profit-taking area since the pair has jumped by over 50% from the lowest point in 2020. 

The other reason is that the Russian ruble comeback coincides with the dollar sell-off. The US dollar index, which measures the greenback against other currencies, is hovering at $101, which is much lower than last year’s high of $115. 

Analysts – I included – believe that the USD to RUB exchange rate will resume rallying in the coming weeks as the ruble sell-off intensifies.


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