USD/RUB: Analysis as the Russian ruble outlook darkens

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Written on Jun 20, 2023

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The Russian ruble has been in a strong bearish trend in the past few months.
It has plunged by over 67% from its highest level in 2022.
There are signs that the Russian economy will worsen.

The Russian ruble plunged to the lowest level since April 13th last year as the country’s economic conditions worsened. The USD/RUB soared to a high of 84, meaning it has jumped by over 67% from the lowest level in 2022.

Russia’s economy is struggling

The Russian economy is struggling as its key exports face major headwinds. For example, natural gas prices have dropped sharply this year and are hovering near the lowest level since 2021. This is a notable thing since Russia is the biggest exporter of natural gas.

At the same time, crude oil prices are not doing well. Brent, the global benchmark, was trading at $75.92 on Tuesday while the West Texas Intermediate (WTI) was trading at $71.15. Russian urals was trading at about $59.

Russia makes most of its money by selling oil internationally. It also sells a variety of commodities like corn, wheat, and platinum that are not doing well this year.

As a result, the country’s budget deficit has continued rising in the past few months. The most recent data shows that the country’s deficit jumped to over $45 billion in the first four months.

Russia has unveiled several measles to narrow the deficit. Last week, the country announced plans for a $3.6 billion windfall tax to fund the deficit. All companies making over Rbs 1 billion annually will be required to pay a 10% tax on profits.

The situation will likely continue getting worse in the next few months as the war in Ukraine continues. Most analysts believe that the war will now continue for years since a deal is not likely in the near term.

USD/RUB technical analysis

USD/RUB chart by TradingView

The USD to RUB exchange rate has been in a strong bullish trend in the past few months. It recently moved above the important resistance point at 83.12, the highest point in April this year. The pair is being supported by the 25-day and 50-day moving averages.

It is also approaching the important 38.2% Fibonacci Retracement level while the MACD and the Relative Strength Index (RSI) have drifted upwards. Therefore, there is a likelihood that the USD/RUB pair will continue rising as buyers target the next resistance point at 86.