USD/RUB is what's known in the finance world as a currency pair. Currency pairs were designed to make it easy to compare the value of one currency to the value of another by asking a simple question. How many units of the first currency can be purchased using only a single unit of the second currency. So, in the case of the USD/RUB currency pair, the question is “Using only one United States Dollar, how many units of the Russian Rubble can be purchased?” Keeping that in mind, in the world of binary options, traders make money by predicting whether the answer to the question is likely to rise or fall. Therefore, if the trader believes that the USD will gain in value faster than the RUB, the value of the pair will rise and a call option is purchased. Adversely, if the trader believes that the value of the RUB will rise faster than the value of the USD, the answer to this question is expected to decline and a put option is purchased to predict the occurrence.
Historic USD/RUB Price Movements
Going back to the year 2005, the USD/RUB had a relatively rough start in the market. Although economic conditions in the United States and in Russia were both positive at the time, the Russian Rubble gained in value at a faster rate than the United States Dollar; leading to declines that would last until the beginning of 2008.
In 2008 and 2009, an economic recession fueled by sub-par lending in the United States spread across the world; leaving financial devastation in its path. During this time, both the United States and Russian economies felt the pain. However, the USD was able to hold its value better than the RUB. As a result, we saw the value of the pair increase exponentially. From there, we saw relatively flat movement over the next several years. While there were ups and downs in the value of the pair, there wasn't much notable movement as the long term trend proved to go sideways. That is, until the year 2014.
In the year 2014, there were a few major issues that hit the Russian economy. First off, the country made the decision to invade the Ukraine-owned Crimea Peninsula; a strategic peninsula in the East. As a result of Russian movements in Crimea, the West, led by the United States, placed sanctions upon Russia; banning much of the trade between the country and the Western Region. As a result, the Russian economy felt the pain and the USD/RUB currency pair started to see gains. However, those gains were nothing compared to what was to come.
In late 2014 an oil supply glut caused a massive decline in the value of oil. As a matter of fact, the decline was so large that it's now known as the oil crisis of 2014. This was another major hit to the already struggling Russian economy. Because Russia's economy is heavily dependent on oil maintaining a high value, we saw major declines in the value of the Russian Rubble. As a result, the USD/RUB currency pair climbed in a big way and continues to climb to this day. Since such kind of information is vitally important for making correct predictions, following recent financial news is a must for binary options trading.
What Causes Movement In The USD/RUB Currency Pair
As with any currency pair, there are three main factors that play a role in the value of the USD/RUB currency pair…
- Worldwide Economic Conditions – When worldwide economic conditions are positive, the Rubble tends to gain in value faster than the Dollar; leading to declines in the value of the pair. Adversely, when economic conditions around the world are less-than-favorable, the United States Dollar tends to hold its value better than the Russian Rubble, leading to an increase in the value of the pair.
- Economic Conditions In The United States – When economic conditions in the United States are positive, the value of the USD increases; leading to increases in the value of the USD/RUB pair.
- Economic Conditions In Russia – When economic conditions in Russia are positive, we tend to see declines in the value of the USD/RUB currency pair. However, when economic conditions in Russia are negative, we tend to see the opposite. It's also important to note that oil prices have a major impact on Russia's economic stability. Therefore, when trading the USD/RUB pair, it's important to watch the value of oil for hints as to what may come next.