Russian Ruble Hooks Up With Oil Rally to Surge Most in the World


© Bloomberg. Residential and commercial properties stand on the banks of Moscow river, viewed from the OKO Tower at the Moscow International Business Center (MIBC), also known as Moscow City, in Moscow, Russia, on Thursday, Dec. 15, 2016. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) — The currency of the world’s biggest energy exporter is finally doing what it’s supposed to be doing: rallying with the price of oil.

The was the biggest gainer in the world on Thursday as it played catch-up with crude’s surge above $77 a barrel following a national holiday. Oil had lost so much force as a driver for the currency that the 60-day correlation between the two assets has dropped to almost zero.

Thursday’s rally doesn’t necessarily mean the historic bond between the ruble and oil is making a more permanent come-back though. Investors are still wary of piling back into the ruble after being caught out holding overweight positions when the U.S. extended sanctions last month, and a recent rally in the dollar is keeping all developing-nation currencies in check.

Russia’s government also has a policy of buying foreign currency for its sovereign wealth fund when oil is above $40, which shields the exchange rate from excessive strength.

Yerlan Syzdykov, co-head of EM fixed income at Amundi SA, said in a research note last week that while fundamentals “look solid” for the ruble, it will remain a shock absorber of political risk, putting fair value at 61-62 versus the dollar. Thursday’s 2.3 percent jump took the currency to 61.75.

“We are witnessing a modest respite for emerging currencies following the recent rout,” Piotr Matys, a strategist at Rabobank in London, said on Thursday. “The ruble and its EM peers should struggle to regain their bullish momentum.”

Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.

Comments

comments