USD/RUB: The Russian ruble meltdown is not over yet

By:
on Sep 4, 2023
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  • The USD/RUB exchange rate has been in a relentless rally this year.
  • Crude oil prices continued rising, with some analysts seeing them hitting $90.
  • The Russian ruble will continue falling as its demand falls internationally.

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The USD/RUB exchange rate resumed the bullish trend as the Russian ruble sell-off regained steam. The pair rose to a high of 96.38, a few points above last month’s low of 91.4.

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Crude oil prices are rising

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The Russian ruble has been in a strong downward trend in the past few months as the war in Ukraine continued. On Monday, Ukraine accused Russia of dropping bombs in Romania, a Nato member. 

If the situation is confirmed, it will be the first time that Russia has bombed a Nato member. It is unclear how Romania and its Nato allies will respond to the new allegations.

The other important news was that Russia and Turkey will hold discussions about the Black Sea shipping deal. Putin will meet with Turkey’s Erdogan at Moscow this week.

The USD/RUB pair has been rising as investors price in more weakness of the Russian economy. While crude oil prices have risen to over $85 per barrel, Russia is struggling to balance its budget. Some analysts see oil hitting $90 soon.

A key challenge is that the Russian economy is a bit locked out from the rest of the world. Most companies abroad have stopped doing business with Russia because of sanctions.

Data published last week showed that Russia’s share of business with the European Union continued falling. EU’s deficit with Russia dropped to ~$1.08 billion for each month in Q2. 

Russia has also seen its foreign reserves drop to the lowest level in years. While Russia and China are working on using their currencies for trade, analysts believe that demand for the US dollar will likely continue.

The USD/RUB exchange rate has also risen because of the stronger dollar. Data by TradingView shows that the US dollar index (DXY) has soared to over $104 and is now sitting at the highest level since June this year.

The dollar index has risen in the past few days after the US published mixed jobs numbers. The economy added over 180k jobs in August while the unemployment rate rose to 3.8%.

USD/RUB technical analysis

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usd/rub

I warned about the Russian ruble strength in my last article. At the time, the ruble was soaring after the Russian government intervened. On the daily chart, the pair has remained above the 25-day and 50-day moving average. 

The price is above the ascending trendline shown in black. Further, the Awesome Oscillator has moved above the neutral point The MACD remains above the neutral point.

Therefore, the USD/RUB pair will likely continue soaring as buyers target the year-to-date high of 101.30.

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