The Russian Ruble (RUB) tumbled to a new record low against the US Dollar (USD) on Monday as concerns over US and European sanctions and the ongoing conflict in eastern Ukraine weigh heavily on the currency.
The Ruble breached an all time low against the Dollar early in the session to trade in the region of 40.05.
Economists are also forecasting that last week’s intervention by the Russian Central Bank will not be its last as it tries to prevent the Ruble’s sharp decline. The currency is likely to decline by 2.9% by the end of next year. The threat of recession is also dragging upon sentiment towards the currency.
‘The story for the Ruble is pretty much the same. The economic picture is bleak without any major brightening ahead. The sanctions of course continue to weigh on sentiment,’ said a strategist at Danske Bank in an interview with Bloomberg.
Economic sanctions imposed by the West upon Russia for its interference in the conflict between Ukrainian government forces and pro-Russian rebels are beginning to have a serious impact upon the nation’s economy.
A decline in the price of oil, one of Russia’s biggest exports was also weighing heavily and with data out of the USA continuing to show that the world’s largest economy is continuing to recover strongly the ‘Greenback’ found more strength.
‘The fall in the price of oil to the level of $92 a barrel for Brent is now impossible to ignore,’ said analysts from ING bank based in Moscow.
Demand for the US Dollar continues to be supported by last Friday’s better than forecast US jobs data, which has fuelled expectations that the Federal Reserve will raise interest rates before the middle of 2015.
The data showed that the US economy created 248,000 new jobs last month, beating expectations for a jobs growth number of 215,000. The data also saw the nation’s overall unemployment rate fall to 5.9%, the lowest level recorded since July 2008.
Russian Ruble to US Dollar (RUB/USD) Exchange Rate Forecast
Russia’s currency is forecast to weaken further over the coming months as the economy weakens and as the nation produces goods that tend not to rise in value whilst importing goods that do. Russia is the world’s largest exporter of oil with half its income coming from sales of the commodity. With oil, tumbling in price the Russian economy is taking a hammering.
As it stands, the Russian Ruble is trading against the British Pound in the region of 0.0156 and against the US Dollar in the region of 0.0250.
UPDATE
The Russian Ruble to US Dollar exchange rate is currently trending in the region of 0.0251.
Confusion as to the timing of a Federal Reserve benchmark rate increase has caused volatility for the US Dollar exchange rate. On Monday the Dollar declined against many of its peers but has now advanced on Tuesday. Futures trading shows a 48% likelihood that the Fed will raise rates to 0.5% or higher by the end of July.
With nothing in terms of Russian domestic data on Tuesday the Ruble is likely to trend lower against the majority of its most traded currency peers.
