USD/RUB has the potential to extend gains on a Biden win – Rabobank

The Russian ruble is one of the most sensitive currencies to the US election as a Biden win is set to end with the United States imposing new sanctions on Russia. Furthermore, oil prices hit the lowest level since June, adding pressure to the RUB, Piotr Matys, Senior Emerging Markets FX Strategist at Rabobank, briefs. 

Key quotes

“If Biden is elected, tensions between Moscow and Washington would likely increase further and could culminate in the US imposing a new set of sanctions on Russia. The last four years have been dominated by the Democrats arguing that Russia interfered in the 2016 election won by Trump, who has an affinity for President Putin. While both countries may cooperate on arms control, the relationship is likely to be tense amid strong anti-Russian sentiment on Capitol Hill.” 

“To some extent Biden becoming the next US president is already priced in by the market. That said, his victory and the Democrats regaining the Senate and retaining the House of Representatives should still bring closer the March high at 82.8729 in USD/RUB.”

“The upside pressure on USD/RUB is not only fuelled by the prospects of a Blue Wave in the US, but also by lower oil prices. Brent crude fell to the lowest level since June (before bouncing back modestly) on the back of growing concerns about the negative impact of the second wave of the pandemic on economic activity in Europe. The US is also struggling to contain the virus and without fresh fiscal stimulus, the economy may lose momentum.”