Russian ruble continues to grid. What next?

The USD/RUB price is hovering near its lowest level in 2015 as the strength of the Russian ruble continued. The pair is trading at 53.60, which is about 65% below the highest level this year. It has fallen in the past four straight months. 

Russia defaults on foreign debt

The Russian economy has emerged from the Ukrainian war at a stronger place than earlier expected. The ruble, its currency has surged against most currencies even as western countries have imposed significant sanctions. 

Are you looking for fast-news, hot-tips and market analysis?

Sign-up for the Invezz newsletter, today.

There are several reasons for this situation. First, Russia has used its natural gas might to demand payments in rubles. As a result, the currency is seeing strong demand from European countries. Before the pandemic, it was the other way round.

Second, while western countries have reduced buying Russian oil and gas, the country has continued selling them to countries like China and India. Therefore, to a large extent, the country has benefited as the price of key commodities has surged.

Third, the Russian central bank has continued supporting the currency by imposing capital outflow laws. This means that it is difficult to move foreign currency from Russia now.

The USD/RUB continued dropping on Monday even after Russia defaulted on its foreign-currency sovereign debt fo the first time in a century. The country was required to pay $100 million to foreign bond holders. The leadership have blamed the strict sanctions imposed by western countries. 

In a statement last week, the government said that it will switch to service its foreign debt in rubles. This will be a major issue that will prevent foreign investors from funding the country. Foreigners now hold about $20 billion of Russia’s eurobonds. 

The strength of the Russian ruble is a positive show of might for Russia. For one, it has helped lower the country’s inflation in the past few months. However, it also poses challenges by making it hard for Russia’s exporters.

USD/RUB forecast

The daily chart shows that the USD to RUB has been in a strong bearish trend in the past few months. The decline accelerated after the pair moved below the key support at 69.41. It remains below the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has drifted lower. 

Therefore, the pair will likely continue falling as bears target the key support at 50. A move above the key important resistance at 69 will invalidate the bearish view.

Where to buy right now

To invest simply and easily, users need a low-fee broker with a track record of reliability. The following brokers are highly rated, recognised worldwide, and safe to use:

1. Etoro, trusted by over 13m users worldwide. Register here >
2. Capital.com, simple, easy to use and regulated. Register here >

*Cryptoasset investing is unregulated in some EU countries and the UK. No consumer protection. Your capital is at risk.