The current president assumed power in Russia in 2000 and
stayed in power de facto during these 20 years. Leaving aside political
questions, let's focus on the economy and try to find a correlation between the
price of oil and the price of the USD
against the RUB.
Until 2015, while the oil price was above $20 per barrel and
kept rising sometimes to cosmic highs like $140, the USD/RUB has been trading
stable at 30. Eventually, the WTI oil price lost more than half its value
dropping from $100 to $40.
Simultaneously, the USD/RUB gained more than 100% flying
from 30 to 70. Interestingly enough, both the oil price and the USD/RUB are now
where they were in 2015 right before the "sudden" change. In any case, that was
the end of Russia's "gold era" of sky-high oil prices, and hence the RUB got
substantially marked down.
The recent Russia-Saudi oil price war made the USD/RUB take
yet a higher baseline level. The most recent spike in the USD/RUB is exactly
where the WTI dropped to $20 (and even below 0 in some markets). In fact, it is
visible that the shape of the chart after 2015 (marked by the green vertical
line) is almost perfectly inverted between the oil price and the USD/RUB.
That's why, specifically with the USD/RUB, one of the main
fundamental factors defining this currency pair is the oil price. The higher it
is - the better for the oil-exporting Russian economy, and hence, the stronger
(or at least more stable) the RUB may be. This comes as a big facilitator to
predict the USD/RUB: just keep your hand on the pulse of the oil price, and you
will know where the USD/RUB goes. For a trader, what can be more convenient?
Source: tradingview.com
Fundamental
The strategic outlook for the USD/RUB is an uptrend in any
case. That is dictated by the supremacy of the American economy against the
Russian - the latter simply cannot stand the competition and is doomed to lose,
just as any developing economy with the currencies such as the MXN, BRL, and
TRY. As we can see on the chart above, even after a bullish rally, an uptrend
was rarely challenged - rather, tested, at times. For example, the years
2000-2015 can be taken as a period of a relative stability of the USD/RUB at or
below the resistance of 30, with 2003-2008 showing a slow decline. That was
ended with the mentioned plunge in the oil price that pushed the USD/RUB far
beyond 30.
The weekly chart of USD/RUB below presents a volatile
picture with an underlying upward trajectory. While the price may keep going
down for a while, it is unlikely it would break the larger uptrend. More
probably, it will come to test the uptrend's bottom at 62-63 and will get back
up to 69-70.
In any case, fundamentally speaking, there is little ground
to expect the RUB to gain value against the USD in the long term. At maximum,
it will stay stable where it is now. That should serve as an ideal background
for trading that may rely on this guaranteed fundamentality. Hence, unless the
oil price makes a substantial drop once again.
This
post is written and submitted by FBS Markets for
informational purposes only. In no way shall it be interpreted or construed to
create any warranties of any kind, including an offer to buy or sell any
currencies or other instruments.
The
views and ideas shared in this article are deemed reliable and based on the
most up-to-date and trustworthy sources. However, the company does not take any
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