The strength of the Russian ruble (RUS) was seen climbing over 0.3% against the US dollar (USD) today after data revealed that China was boosting its oil demand over the coming months. While experiencing a modest decline of approximately 0.5% yesterday due to risk aversion and a strengthening USD, the ruble now appears poised to pare these losses and ride the wave of profits which derive from oil exports.
Russia’s economy has been shaky over the last several years, most recently from a food crisis which saw prices begin climbing around this time last year, eventually forcing the country to severely reduce its exports. Climbing oil prices helped offset some of the economic disadvantages brought as a result of the food price crisis, but Russian business leaders, as explained in an earlier article, see less value in domestic investments.
The Russian economy cannot depend solely on the whim of oil demand to support its economic growth. The crisis of confidence revealed in the survey of Russian business leaders highlights the underlying tension which surrounds Russian investments. The ruble may make gains in the short-term from oil profits, but if steps are not taken to address the lackluster support seen at home, a longer-term bearish movement may be impending.