Russia's rouble rallies past 2-month highs on rising oil prices
Russia’s currency shot up past 2-month highs on Friday in tandem with the price of Brent crude after the European Central Bank released details of its bond-buying program on Thursday.
Midday in London, Russia’s rouble rocketed above its 2-month highs by 1.3% to trade at 59.50 against the US dollar from an earlier low of 61.13.On Thursday’s close, the rouble was trading at 60.74 against the greenback.
The appreciation of the currency followed a strengthening of oil prices overnight in Asia amid increasing optimism over the global economy and the ECB’s unveiling of its EUR60bn per month bond-buying scheme which kicks off early next week.
Oil is one of Russia’s key exports. The drop in oil prices coupled with sanctions on the Russian economy by the EU, UK and US amid concerns about its involvement in the Ukraine crisis has throttled the rouble currency for over 12 months.
Before the Ukraine crisis and subsequent sanctions on Russia, the rouble changed hands at 36 units against the US dollar.
However, the incremental rises and stability in the price of oil in the past seven weeks have proved to be a white knight for the currency. As such, the rouble is around 4% higher against the US dollar for the week.
In the energy markets, Brent crude, a key driver for all Russian assets, rose 0.7% to $61.08 per barrel while Nymex crude was steady at $50 per barrel.