Be clear, the economic impact of Ukraine crisis is not a fundamental driver for the Ruble.  Ukraine sentiment has been responsible for the 75-100bps of weakness but ultimately the Russian economy and CBR policy are what is driving the weakening trend.   

Image courtesy of Elen: Ruble's weakness to fresh lows against the Euro and USD is a function of a Russian economy still reliant on commodity export growth, where we are seeing a significant industrial and consumer slowdown. 

Technically, the Ruble has its own issues.

The CBR is moving towards a freely floating currency regime and thus has been clumsy in the transition to this end.

Meanwhile, the Russian Ministry of Finance is counting the benefits of a weaker currency and is in no way pressuring the CB to be more active in defense of the currency.

This morning the Ruble blew through old levels to 36.20 currently against the USD.

Ukraine is not a cause for alarm on the currency unless you believe this will spiral into a political disaster where Russia truly does bring troops into the country. 

Ukraine is 0.5% of Russia’s trade turnover. If you are trading Russian stocks, Gazprom (10% of sales) and Russian banks are the most exposed to the events in Ukraine.


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