Russian ruble under pressure: exchange rate challenges amidst economic factors
The exchange rate of the US dollar against the Russian ruble, recorded at the beginning of this week, was 102.35, its highest level since March 23, 2022, when the ruble collapsed due to the invasion of Ukraine and the imposition of Western sanctions on Russia.
It is important to note that on March 7, 2022, the exchange rate of the US dollar against the Russian ruble reached its all-time high of 154.25.
The Russian Central Bank held a meeting two days ago, during which they raised the main interest rate by 350 basis points to reach 12%, its highest level in 15 months. This decision is an attempt to halt the downtrend of the local currency. Currently, the exchange rate of the US dollar against the ruble is trading at levels of 94 to 95.
Despite the intervention of the Russian Central Bank and its success in achieving a decline in the exchange rate, this measure to support the local currency is not a sustainable solution. The Russian economy is still suffering from various sanctions, high inflation, an increase in the cost of imports, and military spending, in addition to the decline in export revenues, especially those related to the basic assets on which it is based, such as gas and oil.
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Furthermore, one of the factors impacting the performance of the Russian economy is the strength of the dollar and the resilience of the American economy. Most of the economic data in the United States of America has exceeded market expectations, creating greater pressure on foreign currencies, specifically on currencies in emerging markets such as the Russian ruble, the Chinese yuan, the Turkish lira, and the Argentine peso.
From a technical perspective, the DMI+ in blue is recording around 21 points against the DMI- in orange, which is around 10 points. We notice that there is a gap of about 11 points between these two indicators, indicating that purchasing pressures on the US dollar are currently prevailing. More importantly, the green ADX indicator recorded around 55 points, which is more than 25 points, indicating that the bullish trend's momentum is very strong.
Please note that this analysis is provided for informational purposes only and should not be considered as investment advice.
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