USD/RUB rises to new 65-week high on Russia political risk worries

Key points

The Russian Rouble plummeted to a fresh 65-week trough against the US Dollar on Friday on lingering local political risk concerns and a lack of support-providing catalysts.

“The rouble continues to crumble,” Alor Broker wrote in an investor note.

“It lost another 1.4% in value yesterday, despite stabilising oil. The target for the dollar-rouble pair of 90 is approaching and is likely to be reached.”

The Russian currency lost a key driving factor on Wednesday, since a month-end tax period during which exporters convert foreign currency revenues to meet domestic liabilities passed.

The Wagner group leader Yevgeny Prigozhin’s short-lived rebellion over the past weekend affected global market sentiment earlier this week and left questions regarding Russian President Vladimir Putin’s grip on power.

Meanwhile, the US Dollar Index and US bond yields surged overnight supported by a higher revision in US GDP figure for the first quarter and a fall in jobless claims.

Markets are now pricing in an almost 85% chance of a 25 basis point interest rate increase at the Fed’s meeting in July, while the odds of another hike in September or November have also increased.

As of 9:21 GMT on Friday USD/RUB was gaining 1.22% to trade at 87.9200. During the late phase of the Asian trading session, the exotic Forex pair went up as high as 88.5055. The latter has been the pair’s strongest level since March 29th 2022 (95.7500).

Brent Crude Oil, a key Russia export, was gaining 1.03% on the day to trade at $75.28.