RUB Unwilling to Stop Steady Rally

Following a steady rally, the Russian ruble hit a fresh 1.5 year high against the US dollar. Then, the ruble paused for breath, but a retracement was short lived. Yesterday, the USD/RUB pair approached 57.80. However, at the opening bell at Moscow Exchange, the pair was trading at 57.28. The ruble was losing ground recently for several reasons. One of them is that Donald Trump tweeted a sharp comment on Obama’s too soft attitude to Russia. He accused Russia of Crimea’s annexation. Apart from the comment, the ruble was weighed down by president Putin’s remarks at the meeting with the economic development minister. As for the main catalyst for commodity currencies, crude oil has retreated in light of the reports on oil inventories.

Brent crude is trading at $55.74 a barrel. West Texas Intermediate settled down at $53.4 a barrel. Both benchmark grades are trading under pressure amid expansion of the US oil production. The Energy Information Administration reported that domestic crude inventories rose about 9.5 million barrels last week. According to flash estimates, an oil output rate will increase to 4.870 million barrels per day in March. So, the US crude supplies hit a record level. This dashes the hopes of the investors that the production cut agreement made by OPEC and non-OPEC oil exporters will bear fruit. Such developments triggered jitters among energy investors. Experts foresee high volatility of oil prices in the short-term.

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