Russia’s currency is set to end four days of losses against the greenback as demand for foreign currency declined in Moscow. The country’s main stock index drops for a second day.
Ruble gains 0.1% to 63.2800/$; adds 0.9% versus euro to 64.1850
USD/RUB rate might correct to 55-60 range in the near future, George Vaschenko, head of Russian trading at Freedom Finance in Moscow, writes in a note
“Ruble weakening was not accompanied by significant trade volumes; the weakening of demand will lead to a decline in the exchange rate”
The Ruble has been supported by the strength of Russian energy exports. The $20 pullback in oil prices from between June 30th and yesterday had a knock-on effect for the currency. Despite the fact the Euro was breaking down against the Dollar, the Ruble fell faster. That’s a clear sign of how dependent Russia is on high energy prices to sustain the value of the currency.
It is unlikely to be a coincidence that gold pulled back sharply as the ruble pulled back. The ban on sales to NATO countries is irrelevant since they were not buying anyway. It does appear likely Russia may have sold to support the currency while oil was weak.
If that logic holds, the correlation between gold and crude oil will become stronger. Brent crude rebounded from the $100 area today on Chinese stimulus speculation and gold paused following the breakdown on Tuesday.