USD/RUB forecast as the Russian ruble crash gains steam

The pain keeps continuing for the Russian ruble. The USD/RUB exchange rate surged to a high of 99.54, as I had predicted here. It now sits at the lowest level in over 16 months, making it one of the worst-performing currencies this year.

Russia’s economic headwinds

The USD/RUB and GBP/RUB exchange rates have been in a strong bullish trend this year as concerns about the Russian economy continues. The government is spending more money to fund the ongoing war in Ukraine and exporting less due to sanctions.

Recent data shows that the country’s budget deficit has widened sharply in the past few months.  While this spending has supported the economy, its impact on the currency has been dire. 

At the same time, the economy has seen a jump in imports. Data shows that imports jumped by 20% in the first half of the year. Most of these imports are flowing from countries like China, Turkey, and Central Asia. These imports are being paid for in the US dollar.

On a positive side, Russia is still selling loads of crude oil despite sanctions from Europe. A small crop of oil traders has emerged after giants like Trafigura and Gunvor pulled back from the country.  The most recent data showed that it exported 7.3 million barrels per day in July.

Oil exports have risen at a time when prices have remained steady, with Brent nearing $90 and WTI trading at $84. Russian urals price has held quite well above $60 per barrel.

Further, natural gas price is also rising as concerns of a strike in Australia continued. This is important since Australia’a LNG exports account for about 11% of global supplies.

USD/RUB technical analysis

USD/RUB chart by TradingView

The USD/RUB exchange rate has been in a strong bullish trend after bottoming at 50.53 in 2022. On the daily chart, the pair is being supported by the 25-day and 50-day moving averages. 

The pair is approaching the 50% Fibonacci Retracement level, which is a positive sign. Oscillators like the Stochastic Oscillator and Relative Strength Index (RSI) have moved to the overbought level.

Therefore, the pair will likely continue rising as buyers target the next resistance level at 114.91, the 61.8% retracement point. This price is about 15% above the current level. In the near term, the pair will be a bit volatile since 100 is an important resistance level.