USD/RUB: The plot thickens for the vulnerable Russian ruble

on Jun 2, 2023
  • The USD/RUB exchange rate has moved sideways in the past few weeks.
  • The pair has soared by more than 58% from the lowest level in 2022.
  • Crude oil, natural gas prices have slumped in the past few months.

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The Russian ruble is hovering near its lowest level since April 2022 as the Russian economic struggles continue and the US dollar index (DXY) rebounds. The USD/RUB exchange rate was trading at 80.6, ~58% above the lowest level in 2022.

Crude oil and natural gas collapse

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The Russian ruble has come under pressure as concerns about energy and other commodity prices continue. Natural gas price is trading at the lowest level since 2021 while crude oil has tumbled to about $70 per barrel. And as I wrote in this article on Thursday, some analysts believe that oil prices will tumble to $60 soon.

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The performance of energy prices is important for the Russian economy because of its vast resources. For example, Russia is the third-biggest producer of crude oil after the United States and Saudi Arabia. It is also the biggest producer of natural gas in the world. Therefore, the country makes more money when these prices are soaring.

Other commodities that Russia is well-known for are also in trouble as China’s economic recovery becomes a mirage. For example, the prices of metals used in the electric vehicle industry like copper, lithium, and aluminum have plunged. Agricultural commodities like wheat and corn have also plunged, as I wrote here

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All these factors are important because Russia generates most of its income through commodity manufacturing. The situation has been worsened by the vast sanctions imposed against Russia by Western countries.

At the same time, Russia has seen an influx of Indian rupees that it cannot use. Data shows that it is holding rupees worth over $140 billion and the figure is rising every month. This situation happened as the volume of Indian imports from Russia jumped. 

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USD/RUB technical analysis

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USD/RUB chart by TradingView

The daily chart shows that the USD to RUB exchange rate has been in a bullish trend in the past few months. It is now hovering slightly above the 23.6% Fibonacci Retracement level. Also, the pair is being supported by the 25-day and 50-day exponential moving averages (EMA). 

It has formed an ascending channel shown in green and is now at the middle point. Therefore, more upside will be confirmed if the price moves above the key resistance point at 82.93. A move above this price will see it jump to the next psychological level of 90.

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