After weakening 16% against the US Dollar in the latter half of 2011, the Russian Ruble has reversed course in 2012 and has strengthened 8.6% year to date. This puts the Ruble in a tie with the Colombian Peso for the top spot in terms best performing currencies against the Dollar in 2012.
Considering that Russia is
the #1 oil exporting country, it is not surprising that there is a fairly tight inverse correlation between the USDRUB and the price of oil (in this case we're going to use the Brent front month futures contract).
In light of this recent strengthening, here's a timely article from Reuters with some quotes from the head of the Russian central bank. It's interesting to note that, unlike several other central banks (see China, Japan, Switzerland, Columbia) there were no references made about being prepared to intervene in the currency markets were it to become necessary. We think there are two reasons for this: 1) this current move, while worth noting, is not really that large in the grand scheme of things. The USDRUB has still not yet breached the lows of 2011. 2) Natural resources, such as oil, represent a large portion of Russia's exports. Countries whose primary exports are natural resources, as compared to those who primarily export manufactured goods, receive less of a benefit from currency devaluation.
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