The retreat in the oil market has pushed the ruble and other commodity-linked currencies off their perches. But take a long-term view before you call the Russian currency weak.
The ruble has fallen 3.5% against the dollar and 2.6% against the euro so far this month, prompting plenty of hand-wringing in the Moscow press and regional banks.
Some of the analysts are even calling this “full-scale panic” with nothing to stop it as long as global traders remain skittish about any position that entails elevated risk.
Take a look at the ruble ETF XRU:
While the recent decline has indeed been steep, it only brings the ruble back down to levels we saw back in March — and those levels are still 6.4% stronger against the dollar than they were when the year started.
That kind of appreciation would send most countries into a full-fledged burst of “currency wars” rhetoric and even active intervention in the markets.
The Brazilian real (re-AL), for example, is up only 4.4% so far this year. And the yen has gained 4.5% on the dollar.
Russia, on the other hand, is no stranger to this kind of fluctuation. As a result, it looks like intervention to bolster the ruble looks unlikely at best for the time being — and so the upside for XRU may have played out for the time being.
If you are looking for a currency with central bankers on its side, try the real or the yen instead, or investigate the associated ETFs BZF and FXY.