The USD/RUB exchange rate continued to fall this week as traders monitored new developments in the Russian-Ukrainian war. It also dropped after media reports showed that China was increasing its purchases of Russian gas. It dropped to a low of 81, its lowest level since June 2023.
Why Russian ruble is surging
The Russian ruble has experienced a strong surge following Donald Trump’s election win in the US. Trump campaigned on ending the war in Ukraine by striking a deal that would remove some of the sanctions.
Recently, however, there are signs that talks between the two sides have stalled. In a statement this week, Marco Rubio, the Secretary of the State, warned that Trump was considering walking away if he saw no progress. He said:
“If both sides are serious then we want to help, but if it’s not going to happen, then we’re just going to move on to other topics that are equally if not more important for the US.”
US abandoning Ukraine would likely be a victory for Russia as it would energize it to keep taking territory. Besides, Russia has managed to grow its economy despite the US and other Western countries’ sanctions.
The USD/RUB pair also crashed after reports that China had stopped buying Liquified Natural Gas (LNG) from the United States because of Trump’s trade war. The last Chinese ship with US LNG arrived at Fujian in February, while another one was redirected to Bangladesh.
Firms like Sinopec and PetroChina have largely avoided US cargo after Beijing announced a 15% tariff on US energy. As such, most of this gas will likely be acquired in Russia, a country that supplies a substantial amount of energy.
The USD/RUB exchange rate has also plummeted due to the ongoing decline in the US dollar index. The greenback has plunged from $110 in January to $99 today, and as predicted, there are odds that it will go down to $90.
USD/RUB technical analysis
The daily chart shows that the USD to RUB exchange rate has plunged, as we predicted. It has moved from a high of 113.67 to the current 81. Also, it has crashed below the key support level at 81.25, invalidating a double-bottom pattern that was forming.
The pair has remained below all moving averages. It even formed a death cross in March this year. Therefore, the most likely scenario is where it continues falling as bears target the key support at 74.8350, its lowest point in May 2023. A move above the key resistance at 87.10 will invalidate the bearish outlook.
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