The USD/RUB currency pair is a rare beast with unpredictable behavior. Well, maybe not so rare but in conditions of the military conflict with no end in sight, it’s hard to forecast the quotes. At the least, in February 2023, the US dollar hiked a lot in relation to the Russian rouble, and we really want to find out what is the reason behind it. The question you might ask yourself – is this the moment to buy the RUB that will probably gain back its positions, or will the USD continue its growth?
Several months after the Russian invasion of Ukraine, the USD/RUB quotes stabilized at a price of around 65. If you want to be the champ on future movements, you should use different trading tools – for example, the economic calendar. It helps you to be aware of the latest economic events and change your trading strategy more accordingly.
Now let’s augment the chart with several more months. Over this period of time, the US dollar has increased by 22%. These impressive figures and growth were unexpected by many analysts.
Why has the RUB been under such heavy pressure? There are many different reasons. The most significant one is the new sanctions imposed on Russian oil. The first step was the EU and the UK embargo and price cap on Russian oil – carried out on December 5th. The second step is an up-scaled ban executed on February 5th, which covered not only crude oil but also oil products. Such actions have stemmed the flow of the USD into the Russian economy.
Also in February 2022 the markets were waiting for Putin’s message at the 1st year anniversary of the “special operation” and the rollout of the new sanctions package from the EU.
At the same time, the USD got some support. In autumn 2022, investors expected that the Fed would put the interest rate hike process on pause. That’s why the dollar became less attractive for investors and fell. But it’s already March 2023 and the Federal Reserve still isn’t going to change its policy. For that matter, the market players believe that the key rate will reach, at the very least, 5%.
And at the end of winter, the USD rose not only in relation to the RUB but to the top currency basket as well. We can see it on the DXY chart.
Well, we know the reason behind this growth. But what’s next? That’s the hard part.
On the one hand, we can try to use general patterns. Most of the analysts adhere to the opinion that the Fed will have given up its hawkish policy by the end of 2023. Other major central banks are likely to stop the increase of the interest rates later. It means that the closer we get to the next winter, the weaker the USD will probably be in relation to the other currencies.
On the other hand, the Russian rouble is a very specific currency, mainly due to the geopolitical situation. Sanctions, bans, announcements by authorities, and other similar factors can affect the Russian currency more so than the central bank policy. Plus, existing negative factors will continue to create additional pressure on the Russian economy. So, the 2023 general forecast for the USD/RUB currency pair is somewhere between 70 and 80. But, in theory, the RUB has to slowly decrease to the USD and other major currencies with time.
After all, the USD/RUB holds appeal for traders. Its harsh movements provide multiple lucrative trade opportunities. Risky? Absolutely! But fortune (literally) favors the daring. And rule#1 states: "Before making any decision, study all the aspects."
This article was written in cooperation with TradingView