At the start of a currency trading session on the Moscow Exchange on Monday the dollar's exchange rate with 'tomorrow' settlement fell below Rub 58, namely to Rub 57.96, by 10:12 Moscow time, while the euro decreased to Rub 61.71, data posted on the exchange show.
The ruble, which hit highs against the dollar and the euro last week, continues to set new highs, experts noted. The dollar fell below Rub 58 for the first time since July 24, 2015.
The EUR/RUB has extended losses for the third month in a row, and so far there are no signs of the bottom, Alor Broker's Alexey Antonov pointed out. He thinks that main reasons behind ruble appreciation are still stable oil prices and pressure on the dollar since the beginning of the year.
The ruble's bullish trend gained traction last Friday after the International Energy Agency issued a monthly report, Alpari analyst Vladislav Antonov noted. According to the IEA data, OPEC member states cut oil production by 1 mln bbl in January 2017, while non-OPEC oil producers reduced crude extraction by 500,000 bpd. Thus, the compliance rate for the output cut agreement is 90%.
The report pushed up Brent by 2.25% to $56.84, and traders reacted to the IEA report enthusiastically.
OPEC's oil market report will come out today. "Today we'll hardly see similar robust gains in crude futures like last Friday, although momentarily oil could test the $57/bbl mark," the expert commented. As of 10:12 Moscow time Brent traded at $56.63 per barrel.
If oil breaches $57.50, this will pave the way towards $61.25/bbl, Antonov said. "As the Russian currency is very sensitive to oil prices, if oil trades higher, the ruble will keep strengthening against foreign currencies. At present, any fresh verbal interventions will not prevent a rising flow of speculative foreign capital from reaching the market," the analyst said. According to his forecast, the short-term target for the EUR/RUB is Rub 56.85, and Rub 60.55 for EUR/RUB.
Aside from crude oil, the ruble is bolstered by demand for ruble-denominated assets, added Sergey Kozlovsky, head of research at Grand Capital.
