The USD/RUB price has jumped sharply in the past few days as investors react to several catalysts, including the Bank of Russia decision. It is trading at 77.50, which is about 4.30% above the lowest level last week.
Russia sanctions loom
The main reason why the USD/RUB price is rising is news that the Russian government had built enough military power to carry out an attack on Ukraine.
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In a statement on Friday, the US government said that Russia had all the weapons and manpower ready to invade Ukraine.
Russia worries that Ukraine was moving towards Nato, an organization that was formed to protect western countries from the Soviet Union.
Therefore, there are concerns that Russia’s economy will suffer if Western countries decide to place sanctions on the economy.
President Biden has already said that the economic damage to the Russian economy will be strong. For example, the US is expected to place sanctions on the Nord Strom 2 pipeline. Other sanctions will see Russia locked out of the global financial system.
Many Russian tech companies will also lack crucial parts needed to build their products. However, there will also be damage to other countries. Already, the price of crude oil is approaching $100 while natural gas prices have also risen.
The USD/RUB pair also jumped even after the Russian central government decided to hike interest rates. While most analysts were expecting the bank to hike rates, its size caught many of them off-guard. The bank pushed rates up by 100 basis points to 9.5% as it continued to battle inflation.
In her statement, the central bank governor lamented that geopolitical risks and supply shortages had led to a sharp jump in prices. The bank expects that the economy will grow by between 2% and 3% in 2022.
USD/RUB forecast
The four-hour chart shows that the USD/RUB price has been in a bullish trend in the past few days. It has risen by almost 5% since February 10th. Along the way, the pair has moved above the 25-day and 50-day moving averages while the MACD and the Relative Strength Index (RSI) have risen.
Therefore, there is a likelihood that the pair’s price will keep rising as bulls target the next key resistance level at 80. However, a sign of normalizing relations between the West and Russia will push the pair lower.
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Source: https://invezz.com/news/2022/02/14/usd-rub-heres-why-the-russian-ruble-is-tumbling/