The ruble became the strongest currency in Emerging Markets in February, gaining 1.43% against the dollar at the end of the month. The strengthening of the ruble was mainly observed in the first half of the month and occurred against the backdrop of rising oil prices, which returned to their highs since January 2020. Analysts believe that there are currently no serious risks for the weakening of the ruble against the dollar.
Will the ruble exchange rate continue to rise in March? AMarkets experts answered the question of Fortrader magazine.
– The current month runs the risk of becoming a real test for the ruble. Several factors will act against him on the global market at once, namely the prospect of an even greater collapse in oil prices, new financial and economic sanctions from the West, as well as the potential for a recovery in the dollar exchange rate.
Market participants have already begun to actively withdraw from oil against the backdrop of the OPEC + meeting. OPEC cut production by 870,000 barrels per day in February to 24.89 million barrels per day, compared with January, according to a Reuters poll. Production in Saudi Arabia in February decreased by 850 thousand barrels per day. As a reminder, OPEC + members previously pledged to maintain stable oil production in February, while Saudi Arabia announced a unilateral production cut in February and March. Considering the above, the current corrective pullback in the oil market may well develop into a full-fledged “bearish” rally.
As for the dollar, the move towards buyers was caused by a significant jump in US Treasury yields amid rising inflationary expectations in the US. Traders suggested that such a dynamic in the US debt market could push the Federal Reserve to start tightening monetary policy earlier than expected. Uncertainty about new fiscal stimulus measures remains another factor in the dollar’s growth. As long as Congress continues to slow down the adoption of the new government aid fund, the dollar is not in danger. Thus, we recommend holding “long” positions in USD / RUB with the target at the level of 76.00-77.00.