This week saw the USD/RUB exchange rate continuing its decline as market participants kept an eye on fresh updates regarding the conflict between Russia and Ukraine. The rate further decreased following reports indicating that China had ramped up its imports of Russian natural gas. This brought the exchange rate down to a nadir of 81, marking its weakest point since June 2023.
Why is the Russian ruble strengthening?
Following Donald Trump’s victory in the U.S. presidential election, the Russian ruble saw significant gains. During his campaign, Trump promised to end the conflict in Ukraine through negotiations that could result in lifting certain sanctions.
Recently, however, there are signs that talks between the two sides have stalled. In a statement this week, Marco Rubio, the Secretary of the State, warned that Trump was considering walking away if he saw no progress. He
said
:
If both parties are earnest about this, we wish to offer our assistance; however, if progress isn’t likely, we will simply shift our focus to other issues which could be of equal or greater importance to the U.S.
The withdrawal of US support from Ukraine could potentially be seen as a triumph for Russia, emboldening it to continue annexing territories. Moreover, Russia has succeeded in expanding its economy even with the economic penalties imposed by the US and other Western nations.
The USD/RUB pairing took a hit following reports that China halted purchases of Liquefied Natural Gas (LNG) from the United States due to Trump’s trade disputes. The final shipment of U.S. LNG reached Fujian in February, whereas an additional vessel was rerouted to Bangladesh.
Companies such as Sinopec and PetroChina have mostly steered clear of US shipments following Beijing’s announcement of a 15% tariff on American energy products. Consequently, much of their fuel may end up being sourced from Russia, which is a major supplier of energy resources.
The USD/RUB exchange rate has also plummeted due to the ongoing decline in the US dollar index. The greenback has plunged from $110 in January to $99 today, and
as predicted
,
There are chances that it might drop to $90.
USD/RUB technical analysis
The daily chart indicates that the USD to RUB exchange rate has dropped significantly, as we see.
predicted
It has declined from a peak of 113.67 to its present value of 81. Additionally, it has fallen beneath the crucial support level at 81.25, thus negating a potential double-bottom formation that had been developing.
The pair has remained below all moving averages. It even formed a death cross in March this year. Therefore, the most likely scenario is where it continues falling as bears target the key support at 74.8350, its lowest point in May 2023. A move above the key resistance at 87.10 will invalidate the bearish outlook.
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USD/RUB: Here’s why the Russian ruble is soaring
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