Ruble rally largely explained by oil rebound

The ruble has sold off today but this follows strong gains in recent weeks that made it the best performing EM currency in February. There are several factors that could explain the rebound in the ruble last month but in our view the most convincing is simply that oil prices rallied. This leaves the currency at the mercy of developments in global oil markets. Our view that oil prices are likely to remain around $60pb this year is consistent with the rublehovering around 60-65/$. But another sharp fall in the price of oil would send the ruble tumbling once again.