Posted by Allison on 20 November 2014, 13:07
Currencies have a habit of struggling a bit if the countries that use them go through some tough times. We’ve seen how the British pound went into an uncertain slump just prior to the Scottish referendum. The euro went through some tough trading times thanks to the prolonged recession most of Europe was mired in. Even today it is having trouble getting into a healthy frame of mind again, so to speak.
Now we have a new currency to look at that is going through something similar. If you have watched the news recently or read a newspaper of any kind, you’ll no doubt be aware of the situation with regard to Russia and Ukraine. While this is political in many respects it does also have a bearing on the currency markets.
Indeed, just recently we have seen a dip in the value of the Russian rouble as a result of the situation Russia has found itself in. For starters Russia as a country just isn’t as profitable as it used to be. It is a big provider of oil to many countries but the price of oil has been on the slide too. Add to this the fact that many other Western countries are angry at Russia’s stance against Ukraine and the problems it has caused, and you have the perfect storm. A perfect storm, in fact, that could well result in prolonged problems for the Russian currency.
So where will the Russian rouble end up in a few months’ time? In truth it is far too early to say. The situation in Ukraine is on a knife-edge and no one can be certain of where and how it will progress. Russia is also banking on oil staying at a certain level with regard to price, and there is a good chance this won’t happen. At the time of writing the rouble looked a little healthier but is this merely a positive blip on the radar or is it false hope given the many other challenges the currency – and indeed the country – is facing?
There are a lot of questions that still remain to be answered. Things can change quickly in the currency markets and there is every possibility they will do so here too. We shall be watching.