Dollar to Ruble: What Happens Now?

Dollar to Ruble: What Happens Now?

Dollar to Ruble refers to the US Dollar and Russian Ruble exchange rate. The pair represents two of the most powerful economies in the world—the United States and Russia. Dollar to Ruble, as a currency pair, proves very sensitive to crude oil fluctuations because both countries represent major players in its production and consumption. Russia is one of the largest producers of petroleum products in the world while the US is one of the largest consumers. The pair is also referred to as USDRUB.

Interest in the Dollar to Ruble pair has risen sharply of late following Russia’s attack on Ukraine beginning Feb. 24.

Source: TradingView

In the days following the attack, the European Union, the United Kingdom, the United States and other allies agreed to sanction the Russian Central Bank and certain strategic private banks in response to the aggression. The restrictions on the Russian strategic banks look like a means to prevent Russia from raising funds from the West that provide critical stability to the local financial system and fund critical export and import lines. Notably, the group of allies said that its newest wave of restrictions would not target the energy sector which would have serious ramifications for the rest of the world – especially Europe.

On Monday, the Bank of Russia more than doubled its bank rate to 20%, from 9.5%, as the central bank stepped in to try and prevent a currency crisis after the US and the West imposed its stringent sanctions, including a partial expulsion from the SWIFT payment system. A statement by European Commission President Ursula von der Leyen said the removal of certain Russian banks from the system would ‘stop them from operating worldwide and effectively block Russian exports and imports.’

Already there is a severe impact on the Ruble, which was trading at a record low to the Dollar before the fresh sanctions pushed another, staggering 25 percent depreciation. The Ruble is likely to collapse further heading into March with reports that Russians are looking to draw foreign currency at local banks. These actions are severe for Russia’s financial system with likely further currency crises ahead.

Adding to Russia’s financial woes, S&P Global Ratings cut Russia’s credit rating to “junk,” citing the “strong” sanctions. Moody’s Investor Service – another top ratings agency – put Russia on review for a downgrade.

Learn more in the Russian Ruble Outlook.