USD/RUB – ForexUSDRUB
When we talk about bigger countries and bigger economies, two countries that stand out are the United States of America (USA) and Russia. Seen by most as adversaries, but both the U.S and Russia do share bilateral diplomatic and trade relations. The U.S is regarded as the largest economy, and Russia, once considered as a major force, faced tremendous domestic and economic crisis in the 1990s. But the Russian economy is again gaining momentum and many experts term the country as ‘resurgent Russia.’
In the Forex market, the relationship of U.S Dollar with Russian Ruble is given by the USD/RUB pair, where the USD is the base currency, while RUB is the quote currency. The USD/RUB pair is not part of the major currency pairs that are traded but considered as an exotic pair in Forex trading due to the global importance of both the countries. Like the Japanese Yen, the Russian Ruble is also quoted to two decimal places.
The exchange rate of the USD/RUB pair shows how many Ruble can be converted into one U.S Dollar. For example, if the current USD/RUB quote is 69.44, it shows that 1 USD is equal to 69.44 RUB, or in other words it means you have to have 69.44 Ruble to buy 1 Dollar. The performance of the USD/RUB pair depends on the political and trade relations between the U.S and Russia. However, the USD/RUB is quite volatile, hard to predict, and behaves erratically sometimes in the market. The USD/RUB pair is not suited for novice traders, but experienced investors can avail the opportunity to diversify the portfolio and have the possibility to potentially profit.
History of USD/RUB Currency Pair
The Russian economy is regarded as a commodity-driven economy as Russia is one of the leading exporters of oil. The value of the Russian Ruble is relative to global oil prices. The Russian Ruble has gained strength since the value of black gold has increased. The RUB has seen considerable fluctuations and crises in 1998, 2008, and 2014 due to a decline in crude oil prices.
The trade relationship between the U.S. and Russia is limited and not wide-scale as compared to the trade relationship between the U.S and U.K. or trade relations between Russia and China. However, according to statistics, Russia imports 2.9% of total exports of the U.S; on the contrary, the U.S imports a meager 0.41% of total exports of Russia. The major component of U.S exports include vehicles, and railway while the main export components of Russia are oil products, mineral fuels, and distillation products.
How to Trade USD/RUB Pair
The USD/RUB pair has increased in volatility in recent years, and it means short term traders can try to take advantage and try to profit in a short space of time. The USD/RUB pair can be traded 24/7 from Monday to Friday, but the market is most active during the European and American sessions. The USD/RUB pair is mostly traded by the Russian investors as many traders and investors in the U.S still consider the Russian Ruble to be an unstable currency and a risky investment.
Among other ways for trading USD/RUB pair a popular option is Contract of Difference (CFDs), and as a trader, you can trade on the value of the underlying asset and not actually own the currency. You can also trade using leverage where with a small initial deposit, you can open a larger trading position.
You can predict the rise or fall of the price movement, and each correct prediction magnifies your profits, but each wrong prediction also leads to equal losses. So it is important to consider to implement a risk management tool such as stop loss to minimize the risk of further financial losses. You can also trade both long and short; which means, if you think the USD will appreciate against the RUB, then you would Buy or go long, and conversely, if you think the USD will depreciate against the RUB, then you would Sell or go short.
How to read the Price Change in USD/RUB Pair
In recent times, the USD/RUB pair has shown considerable activity and volatility. The price movements of the USD/RUB pair can easily be analyzed through a price chart. The value of RUB is directly proportional to the value of oil prices. For example, if the oil price rises, then the value of RUB will also rise, and if there is a decline in oil prices, then the value of RUB will fall.
If we look at the USD/RUB price chart, we see a common trend where the USD/RUB traded between the ranges of 60.00 to 66.00. However, the USD/RUB pair reached a considerably high value of 80.80 on March 18, 2020, and a considerable low of 68.10 on June 8, 2020. Currently, the USD/RUB pair stands on 69.150. The Bid or Buy price is 69.533, while the Ask or Sell price is 69.490. A usually bullish trend is noted when examining the USD/RUB pair, and it is mainly due to economic factors rather than technical factors.
If the USD/RUB rate declines, it means that RUB has gained value relative to USD, and if the USD/RUB rate increases, it means that the RUB has lost value, and the USD has strengthened its value. If we examine the economic data for the last five years, then the exchange rate of USD/RUB reached the highest value of 82.45 in January of 2016 and the lowest value of 0.98 in August of 1993.
What causes price change in USD/RUB pair?
The monetary policies of central banks in the U.S and Russia directly influence not only the individual values of U.S Dollar and Russian Ruble but also the exchange rate of USD/RUB. The U.S Federal Reserve Bank, popularly known as Fed and Russian Central Bank, develop monetary policies and releases economic data that determines the individual value of USD and RUB and also the quote of USD/RUB pair.
The macro-economic factors that play an influential role in determining the economic health of the country and currency value include interest rates, Gross Domestic Product (GDP), inflation, consumer price index (CPI), and unemployment rate. Of all the factors, the interest rates are quite crucial to determine the direction of the USD/RUB pair. If the interest rates are high in Russia, then the USD will decline in value, and similarly, if the interest rates are increased in the U.S then it will strengthen the U.S Dollar.
The USD/RUB quote is also dependent on other currencies such as Euro, and if the Euro declines in value, then the U.S Dollar gains in value not only against Euro but other global currencies as well. The exchange rate of USD/RUB pair is also impacted heavily by global political news and events, apart from the monetary policies. If we take the U.S Dollar, then its value is impacted considerably by the decisions taken by the Fed. A trader may be able to successfully trade the USD/RUB pair by using the effective short and medium-term strategies.
The information above is for education purposes only and cannot be considered as investment advice. Past performance is not reliable indicator of future results.
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