USD/RUB is an interesting case study right now because there are strong real-money flows into the ruble from oil, gas and other commodity sales.

At the same time, there's the massive possible pending possible capital flight due to war and sanctions.

The war worries are winning out at the moment, with USD/RUB threatening to take out recent highs near 77.00.

Taking a look at the longer term chart is instructive. The ruble imploded in 2014 after the conflict in Donbas and has never recovered. That time it was compounded by a drop in brent to $45 from $110.


It's an entirely different backdrop this time but it seems to me there's an asymmetric trade to the upside on war, or at least as a portfolio hedge.

It's also clear to me that the FX market isn't yet taking the possibility of open conflict too seriously.