Throughout nearly the past year, the Russian Ruble has struggled but binary options traders can profit from taking positions on uptrends. The start of the fall came in mid-2014 when the west placed sanctions on the country for its involvement in the turmoil in the Ukraine. Since then, the currency has been dealt several heavy blows. Today, we'll discuss the reasons we've seen declines in the Ruble, Putin's plans to further strengthen the currency, and what we can expect to see from the currency moving forward. So, lets get right to it.
Why The Russian Ruble Has Seen Declines
The declines started in mid-2014 as Russia started to vie for control of the Crimea Peninsula; a strategic land currently owned by the Ukraine. Because Russia looked to take control by force, the West made the decision to place financial sanctions on the country. Shortly following the sanctions, Vladimir Putin banned many imports from the West; including most food products. As a result, the Russian economy started to struggle. However, the big hit was yet to come.
Following the sanctions and the economic affects they had on Russia, the country was hit with another big blow. Massive spikes in the production of oil caused the value of the commodity to fall dramatically; hitting record lows and causing pain to oil production countries around the world. One of those countries was Russia. The bottom line is that the vast majority of Russia GDP comes from the production of oil. It's said that the countries economy is so dependent on the commodity that it essentially subsidizes everything else. As a result, the Russian Ruble started to take a free fall path towards the bottom.
We've Started To See A Bit Of A Recovery From The Ruble
In the past three months, we've started to see some pretty impressive gains from the currency. So, what's causing the upward movement? Well, there are two major factors that seem to be causing the trend…
- Oil Stabilization – As mentioned above, the value of oil plays a major role in the success of the Russian economy. Because Russia is so heavily dependent on the commodity, we tend to see the economy struggle when the price of oil is low. Adversely, when the price of oil is high, the Russian economy, and currency for that matter, tend to do well. Over recent months, we've seen a bit of stabilization in the value of oil. As consumers continue to take advantage of low prices, demand is rising and so too is the price. As a result, Russia's economy is showing signs of recovery and their currency is doing the same.
- Stimulus – Another big factor that plays a role in Russia's recovery is the stimulus that the country has put into place. The country has put several plans in place that would increase Russia's debt, change the countries infrastructure, and more. All in all, the stimulus plans put into place seem to be assisting the countries economic recovery.
As a result of the two primary factors listed above, the Russian Rubble has gained more than 20% on the dollar and more than 35% on the Euro in the past three months; and seems to be continuing the trend.
What We Can Expect Moving Forward And How You Can Profit
Moving forward, I'm expecting to see more short term growth from the Russian Ruble. However, in the long run, I think the country is headed for more economic blues; and it's all tied to the value of oil. Although the value of oil is stabilizing, we are still nearing issues with regard to storage of excess. Demand is increasing, however, it's still not enough to completely offset production. So, at some point over the next few months, we're likely to see the value of oil drop yet again. As a result, the Russian Ruble will most likely struggle as well. So, trade the uptrends for now, but watch the price of oil very closely. When you start to see a breakout in the downward direction from oil, expect downtrends for the Ruble to come as well!