The Russian ruble is crashing it

The Russian ruble is crushing it. The USD/RUB pair has been in a strong bearish trend in the past few months even as the crisis in Ukraine continues. It dropped to a low of 55.67, which was about 65% below the highest level this year.

Russia Central Bank cuts rates

The Central Bank of Russia (CBR) has had the toughest task this year. It is also one of the leading central banks that has succeeded in stabilizing its currency.

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Shortly after Russia invaded Ukraine, the CBR decided to hike interest rates to the highest level in years. By hiking interest rates, the bank’s aim was to prevent further ruble crash. It also placed limits on the amount of money that could move from the country.

In the past few months, the bank has embraced a more dovish tone. On Friday, it made another 40 basis rate cut. It brought interest rates from 14% to 9.5%, which is more than half where it was when the invasion happened. This rate cut was higher than what most analysts were expecting. 

These rate cuts happen because the strong Russian ruble has made inflation less severe in Russia than earlier expected. Data published on Thursday showed that the headline consumer price index declined to 17.1% in May.

The USD/INR pair has also crashed because of the recent price action in the energy market. Crude oil and natural gas prices have all surged recently. Oil has moved back above $120 while a fire in a gas terminal in the US pushed natural gas to record highs. 

Further, the decision by Russia to insist gas sales using the ruble has helped push the currency much higher. As such, from the performance of the Russian ruble and the country’s stock market, it seems like Russia has won the economic front.

USD/RUB forecast

The daily chart shows that the USD/RUB pair has been in a strong bearish trend in the past few months. Along the way, the pair has moved below all moving averages. It also formed a death cross in May when the 200-day and 50-day MAs made a crossover. At the same time, the MACD has moved below the neutral level while the Relative Strength Index (RSI) has moved to the oversold level. Therefore, the pair will likely keep falling in the coming weeks.

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