The Russian ruble is weakening against its US counterpart on Tuesday as Western sanctions on Moscow continue to weigh on the currency. Despite optimism among market analysts for the ruble, the currency has slumped approximately 4% this year as investors become hesitant regarding geopolitical tensions. But could energy commodities support the ruble?
According to the Federal State Statistics Service (FSSS), the gross domestic product (GDP) rose 0.5% year-over-year in March, up from the 2.5% contraction in February. This represented the first monthly gain since February of last year.
The FSSS also reported that retail sales tumbled 3.4% year-over-year in March, down from the 1.5% drop in February. For 12 of the last 13 months, the retail trade has experienced a contraction in both food and non-food products.
On a monthly basis, however, retail sales surged 9.2%. But in the first quarter, retail activity tumbled 1.6% from the same time a year ago.
Real wage growth picked up steam in February, rising 2% year-over-year. The market had penciled in a tepid gain of 0.2%. The unemployment rate fell to 5.4% in March, coming in lower than the median estimate of 5.6%.
Like other economies, inflation continues to be a major problem in Russia. The producer price index (PPI) surged at an annualized rate of 16%, accelerating at the highest pace since November 2018. Higher producer prices were driven by manufacturing, mining, and utilities.
On a per-month account, the PPI rose 3.6%.
In other economic data, industrial production edged up 1.1% year-over-year in March, coming in higher than the -1% projection.
Russia continues to be significantly impacted by the US government sanctioning dozens of Russian officials and expelling ten diplomats from the US. Washington also imposed new restrictions on buying Russian sovereign debt. These actions were in response to the alleged SolarWinds hacking of federal agencies and interference in the 2020 election.
President Joe Biden said in a recent statement:
“We cannot allow a foreign power to interfere in our democratic process with impunity. If Russia continues to interfere with our democracy. I’m prepared to take further actions to respond. It is my responsibility as president of the United States to do so.”
Although crude oil prices have rallied 600% over the last 12 months, they have cooled down a bit in recent weeks. On Tuesday, May West Texas Intermediate (WTI) crude oil futures tumbled $0.98, or 1.55%, to $62.40 per barrel. June Brent crude futures slipped $0.77, or 1.15%, to $66.28 a barrel. May natural gas futures dropped $0.013, or 0.47%, to $2.736 per million British thermal units (btu).
The USD/RUB currency pair climbed 0.77% to 76.97, from an opening of 76.34, at 16:59 GMT on Tuesday. The EUR/RUB increased 0.72% to 92.60, from an opening of 91.90.