USD To RUB Went Up As Many Factors Influences The Rouble

The Russian ruble rolled back yesterday with a sharp movement from the iconic round levels. Such a reversal often signifies the end of the previous trend and the beginning of a new movement. If you look at USDRUB only as a course chart, then the corrective momentum has the potential to return the pair to 75 from the current 78 over the next couple of weeks.

Seasonality, or rather the macroeconomic environment, is also turning towards the ruble. Exporters will have to convert last year's record earnings to pay taxes, some of which are paid once a year. The weakening of the ruble since the beginning of the year is a good opportunity to add interest to profits due to exchange rate differences.

What awaits the ruble: an equation with unknowns - 1

This is all in addition to record oil prices for 8 years and the suspension of foreign currency purchases for the Finance Ministry. We should also not forget about the high interest rates that the Bank of Russia has been aggressively raising since March last year. And the markets are waiting for another 100-point increase in two weeks to 9.5%, which further increases the profitability of the ruble money market.

But, unfortunately, fundamental and macroeconomic factors are far from being the only components of the complex exchange rate equation. Geopolitics also play an important role. A clear improvement in relations between countries and the issue around Ukraine has not yet developed.

Worse still, investors remain alert that the rhetoric of US and EU officials on the one hand and Russia on the other can quickly fall out of the constructive rut.

At the same time, experienced market participants know that when the level of uncertainty rolls over, market dynamics (up or down at the end of the day) is the best filter for the news noise around us.

Alex Kuptsikevich

Financial market professional with 16-years' experience and Senior financial analyst at FxPro. Author of daily reviews on the impact of economic events with comments regularly featured in top international and Russian media. Covers fundamental analysis, global markets, foreign exchange market, gold, oil, cryptocurrencies.

Alex Kuptsikevich is a regular contributor to both digital and print media including CNBC, Forbes, Reuters, MarketWatch, BBC and Coindesk.