Moscow Times: Ruble Hits New 2015 Highs in World’s Best Currency Rebound

(Moscow Times – themoscowtimes.com – Howard Amos – April 8, 2015)

The Russian currency strengthened rapidly Wednesday as a recent rally driven by greater confidence in the ruble and easing international tensions overpowered the downward pressure of a sliding oil price.

The ruble jumped over 3 percent in morning trading to 53.4 against the U.S. dollar before weakening slightly to 53.8 shortly after midday. The ruble also rose 2.5 percent to 58 against the euro.

Now trading at 2015 highs, the ruble has clawed back some of the losses it sustained during a run on the currency in December that was driven by lower oil prices and Western sanctions on Russia over Ukraine.

“The market has reconciled itself to the growth of the ruble and it’s risky to stand against it,” ING’s chief economist in Russia, Dmitry Polevoy, wrote in a note to investors Wednesday.

Local purchases appear to be driving the ruble’s recovery, which has transformed the currency from the world’s worst performing currency to the world’s best in a matter of weeks. The currency has climbed 34 percent against the greenback since mid-January.

“Companies and, probably, the population as a whole continue to sell,” Poloevoy wrote.

Lower levels of violence in eastern Ukraine as a ceasefire between Kiev forces and separatist rebels appears to hold has also given support to the ruble.

The ruble’s gains have come against energy market trends. The price of international benchmark Brent oil has ticked up since the beginning of this month but fell towards $58 a barrel Wednesday.

But the rally is put into context by last year’s huge devaluation. Even at its current levels, the ruble is down 39 percent over the last six months. The currency shed 41 percent of its value against the dollar in 2014 and in December plummeted to 80.1 against the dollar, its lowest levels since the late 1990s.

Some analysts cautioned that the rally might not last.

“We see more room for advancement but are wary of a potentially sudden reversal, as we see fundamental support as lacking,” analysts at Sberbank CIB wrote in a note to investors Wednesday.