Thursday 27 December 2018

Close link between oil and rouble falters | Financial Times

Close link between oil and rouble falters | Financial Times:

In simpler times, it was a safe bet that the value of the Russian rouble would follow the price of oil like a shadow. Falling oil meant a falling rouble; rising oil took the currency up with it.

As the first chart shows, this held true for most of the past five years. But times are no longer so simple and this year — shown in more detail in the second chart — the correlation has broken down.

As Brett Diment, head of emerging market debt at Aberdeen Standard, wrote for the FT’s beyondbrics column this month, the rouble fell in April even as oil prices rose after the US imposed sanctions on Russia. In the fourth quarter, the rouble staged a recovery while oil prices collapsed, as the fear of further sanctions receded.

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