Russian Rouble's Dance with Geopolitics and Oil Prices

The Russian rouble hovers near 82 to the U.S. dollar, influenced by the war in Ukraine and oil prices. Improved Moscow-Washington relations and a potential ceasefire have driven appreciation. Recent oil price recovery and increased FX sales have bolstered the rouble, despite limited foreign currency demand.

The Russian rouble remained close to 82 per U.S. dollar on Tuesday, sensitive to geopolitical tensions from the Ukrainian conflict and oil price fluctuations. So far this year, the rouble has gained significant value, supported by better Moscow-Washington relations and potential ceasefire prospects in Ukraine, coupled with interest rates at 21%.

As of 0843 GMT, the rouble had decreased by 0.2%, standing at 82.40 against the dollar in over-the-counter trading. According to Yevgeny Loktyukhov of Promsvyazbank, the geopolitical news landscape continues to be a key determinant in exchange rate movements in the Russian forex market, particularly due to the limited demand for foreign currency arising from imports.

This month's slight oil price recovery and increased state foreign exchange sales have provided a modest boost to the rouble. Russia now sells 10.5 billion roubles ($127.4 million) of yuan daily after the finance ministry shifted to FX sales due to decreased output and tax shifts causing a budget shortfall in March's oil and gas revenue projections. Brent crude, a global benchmark, was up 0.6% at $65.26 a barrel, yet it remains approximately $10 lower this month due to global trade concerns. The rouble also saw a 0.1% increase against the Chinese yuan on the Moscow Exchange.

(With inputs from agencies.)