Though seen in sharp decline earlier this week, the Russian ruble (RUS) has been paring much of its losses in exchange for growth as stock markets rebound on statements made by the US Federal Reserve on Tuesday. The crash of global stock markets, brought about by the ratings downgrade of US debt by S&P’s ratings agency, had also pulled heavily down on the value of the ruble versus its major currency counterparts.
A sharp downturn saw the RUS hit a 6-month low against the US dollar (USD), with similar losses felt against the euro (EUR). The announcement that US interest rates would likely be held near historic lows for the next two years, however, has helped stocks rebound strongly, with the ruble trailing not far behind.
Russia’s financial stability was called into question these past few weeks as surveys showed large domestic investors looking away from Russian assets for the bulk of their trading portfolios. As the price of oil and gas tumbled over the last two weeks, income earned by Russia’s chief exports also dipped, weighing heavily on the nation’s budget. The rebound in global stocks should help shore up some of this siphoned strength, but recouping the loss of confidence may take more time.
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