Background
The Russian ruble has gained about 2.5% in the past month and is among the most undervalued emerging market currencies. It’s worth considering charts on oil, COVID-19 and the economy before chasing the rally.
Vladimir Putin and Joe Biden restored some Russia-U.S. diplomatic ties in Geneva on June 16, easing concerns over political risk that have prevented the ruble from tracking gains in oil. Surging coronavirus cases and inflationary pressures may also be curbing appreciation.
“Russia’s economy has proved resilient through sanctions and a severe coronavirus outbreak, while rebounding commodity exports are a tailwind,” said Scott Johnson, an economist for Bloomberg Economics. “A fading of political risk would bring those ruble supports into sharper focus.”
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