10 feb
RUB fluctuations against USD continue: why and what should we expect?

The past week was a difficult one for the Russian currency. It was continuously stressed due to decreasing oil prices, the virus in China, and the reduction of the key interest rate. Positive news could improve the situation.

 Last week, RUB swung from one extreme to another against the negative situation in the external markets and changes within the country. As a result, by the end of the last business day, RUB was showing a downward trend and a significant decrease to the world's major currencies. The main reasons were the reduction of oil prices and investors' turning away from risky assets.

 On Friday, the USD rate reached its annual maximum—the USD/RUB pair was traded above ₽64. EUR/RUB did not show such active growth, the increase amounted to 0.7%, to ₽70.2103.

 Analysts believe that the exchange rate of the Russian currency was almost not affected by the Bank of Russia's decision to reduce the key interest rate. It should be reminded that it was reduced by 0.25 pp, to 6%. The changes on the exchange rate had slight impact only for some time, though they quenched the eagerness of some investors to buy RUB.

 Experts also note that RUB is very sensitive to external factors. Among the main events of this week will be news about the spreading of coronavirus in China. Moreover, Russia's continuation of its negotiations with OPEC partners about the continuation of the oil production cut may have negative influence as well. The negotiations were launched last week, though no final decisions have been made yet.

 The majority of analysts believe that the exchange rate of RUB to USD will remain within ₽63.8–64.20, and to EUR, within ₽69.80–70.55. Nevertheless, some experts believe the figures to be even higher: ₽64.30 and ₽71.00, respectively. USD strengthens on good January statistics about employment in the USA. Positive news about the coronavirus vaccine and the improvement of the oil market situation are the only things that can help RUB strengthen.