Russian Rubble Declines on Ukraine and Weak Fundamentals

The ruble has taken a big hit as political tensions escalate over the fate of Ukraine and the Russian economy falters.
The currency has fallen by 1.4% versus the U.S. dollar over the past week, bringing its decline for the year to 10%. The dollar now buys 36.10 rubles, a level not seen since 2009.

oreign exchange traders have reacted, in part, to rising regional tension since Ukrainian protestors forced pro-Moscow President Viktor Yanukovych from office.
“Any political volatility or military stand off in the region will send negative signals to [people] who have investments in those countries,” said Lilit Gevorgyan, a senior economist at IHS Global Insight.
“If Russia ventures into military action in Ukraine, this will have a serious impact on the performance of the Russian currency,” she said.
Russia has strategic interests in its neighbor Ukraine, a country that is divided between pro-European regions in the west and a more Russia-oriented east.
Ukraine is a key route for Russian gas exports to Europe and has a large Russian-speaking population. It’s also home to a Russian naval fleet, based in the city of Sevastopol in the Crimean region.

via CNN

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza