RUB: Too good to be true - Nordea Markets

According to the Research Team at Nordea Markets, the Russian ruble has been performing quite well since the beginning of the year but they warn that volatility is likely to return as sanctions risks come back in focus.

Key Quotes: 

“The RUB was enjoying, to the fullest, the general EM recovery fuelled by a softer Fed and hopes around a potential US-China deal. The oil price settled above the psychologically important USD 60/bbl threshold, which provided additional support. The sovereign rating upgrade from Moody's to investment level was another reason behind the strong appetite for Russian assets. As a result, by mid-February, the RUB appreciated by 5.8%, thereby showing the best performance among EM currencies.”

“With limited sanctions talk since autumn 2018 (except positive news on Rusal delisting from the SDN list), the market started to forget about sanctions. The country risk premium, as measured by CDS, has narrowed to just 130 points (lower than before the August sanctions wave). Foreign investors came back aggressively, buying record amounts of RUB-denominated bonds and stocks. RUB volatility briefly decreased below that of the EM average, touching the lowest level since the April sanctions episode. The RUB appreciated all the way to the robust support level of 65.5 vs the USD, and was about to test it, but a new wave of sanctions threats spoiled the party.”

“As a new sanctions bill is being pushed forward through the US Congress, news flow on the subject will intensify in the coming months. Even though there is still a long way to go before new waves of sanctions are implemented (if implemented at all), this topic will again become the focus of the market, promising more pressure on the RUB and more volatility. As the market is warned that sanctions risks are not off the table, the levels around 65.5 vs the USD and 74 vs the EUR should remain the limit for RUB appreciation.”

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD turns below 1.10 as market mood eases

EUR/USD has dropped below 1.10 as the market mood improves. Earlier, it hit three-week highs as the stock market crash and rush into bonds is raising the chances of the US Fed cutting rates. Further coronavirus headlines are awaited.


GBP/USD hits new 2020 low amid Brexit rhetoric, coronavirus headlines

GBP/USD has dipped below 1.2850, hitting a new 2020 low as concerns about a no-trade-deal Brexit are weighing on the pound. Coronavirus-linked USD weakness is minimal in this pair.


Crypto summer will be back in the next spring

The attention of the financial world is right now on the equity segment. The force with which prices are moving down is extraordinary, with terrifying technical details such as a close below 3000 points on the S&P 500… 100 points down!

Read more

WTI erodes over 4% amid coronavirus rout, $44.35 closer

WTI (oil futures on NYMEX) remains deep in the red zone so far this Friday, having hit the weakest level in 13 months at $44.97 in the last hour.

Oil News

FXStreet launches Real-Time Trading Signals

FXStreet Signals offers access to explanatory live webinars, real-time notifications when signals are triggered and exclusive membership to the company’s Telegram group, where users get direct guidance by our analysts and get room to discuss and interact.

More info