The Russian ruble (RUB) continued its freefall against the US dollar as the market reacted to the soaring oil shipment data. The USD/RUB exchange rate jumped to 93.98 on Tuesday, its highest level since February.
Russia’s oil sales are soaringA report published on Tuesday showed that the amount of Russian oil shipments is soaring even as Western countries continue their shipments. Cargos sold last week surged to its highest level in eleven months. Last week, the country sold oil worth over $2.15 billion, an increase from the four-week average of $1.92 billion.
These numbers mean that Russia is doing well, helped by the rising oil demand from other countries like India, China, and Pakistan. China received 9.1 million barrels while Indian refineries rose to over 7 million.
Russia is also selling crude oil at a price higher than the price cap set by Western governments like the US and the European Union. Brent and West Texas Intermediate have surged to over $87 while Russian urals was trading at $82.15 and is hovering at its highest point since 2022.
Industrial metal prices are risingThe Russian economy is also benefiting from the rising prices of industrial metals like aluminum, copper, palladium, gold, and platinum. This recovery happened as signs emerged that the global economy is doing well.
Data published this month showed that the manufacturing PMI in key countries like China and the United States jumped to over 50 in March. That is a sign that there is demand for key industrial metals.
Another report released on Tuesday revealed that China’s GDP expanded by 5.3% in the first quarter of the year. This increase was better than the median estimate of 4.8% and higher than the previous quarter’s 5.2%.
Analysts believe that the new sanctions by the UK and the United States on Russia’s industrial metals will backfire. The new sanctions mean that Russian metals will not be accepted at the London Metals Exchange (LME) and the Chicago Metal Exchange (CME). In a statement, analysts at ING wrote that:
“Prices of copper, nickel, and aluminium are likely to initially move higher, and in the short term, the market will remain volatile, mainly due to the large uncertainty in supply and LME delivery post-sanctions changes.”
Therefore, the USD/RUB exchange rate is rising because of the strong US dollar. The US dollar index (DXY) jumped to a high of $106, its highest point since November. It has jumped by more than 6% from its lowest point this year.
The Russian ruble is not the only emerging market currency that is plunging. As I have written before, key currencies like the Philippine peso, Indonesian rupiah, and Malaysian ringgit have all retreated this year.
Therefore, there is a likelihood that the USD/RUB exchange rate will likely continue rising as buyers target the crucial resistance point at 95.54, its highest swing on February 23rd. A blast above that level will point to more upside, with the next point to watch being the psychological point at 100. On the flip side, a break below the support at 93 will point to more downside.
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