Why is the Russian ruble unavailable to trade in forex markets?
Ryan Thaxton October 17, 2022 1:56 PM
FX pairs such as USD/RUB and EUR/RUB are unavailable to trade with most North American brokerages including FOREX.com because of Russia’s invasion of Ukraine.
Why is the Russian ruble unavailable to trade?
The ruble is currently unavailable to trade with FOREX.com (and many other brokerages) because of Russia’s invasion of Ukraine.
The war against Ukraine that Russia began in February 2022 prompted a slew of sanctions against Russia by major nations and groups including the US, EU, UK, Japan, Canada, and many others. These sanctions include trade bans on Russian exports and imports, as well as transactions with Russia’s central bank. The exchange of currencies, such as US dollars to Russian rubles and euros to rubles, has also been blocked.
Because of these sanctions, the value of the ruble has become disconnected between its quote inside Russia and the quote outside of Russia by foreign central banks. This disparity creates extreme volatility in ruble pairs, especially USD/RUB, increased spreads, and the risk of gapping when trading RUB with major currencies like USD and EUR.
Within a few days of Russia’s invasion, the ruble was blocked from the SWIFT network, a global system used by major banks and financial institutions to transfer money. This removal prevents Russia from making financial transactions with other countries and, along with the numerous other sanctions, has threatened to bring about the collapse of the Russian currency.
Since February 2022, the rate of USD/RUB has spiked from 75 to 139 and down again to 52. Over the summer the ruble spiked twice more to levels near 110 but otherwise traded between around 55 to 65.
Despite the volatile spikes, the strength of the ruble increasing against the dollar makes it an outlier in the global market. Almost all other major currencies have weakened considerably against the US dollar in 2022. The USD reached parity with the Euro and GBP/USD fell to 1.07, a level not hit since 1985.
The ruble has experienced similar volatility against the euro. The EU has placed many of the same sanctions on Russia as the US, causing the EUR/RUB pair to also be unavailable to trade for many forex brokerages.
In early March 2022, the EUR/RUB rate spiked to 148.38 after trading between 82 to 91 for the year prior. After this, the rate cooled to trade between 55 to 65 from mid-June to mid-July.
The ruble as a controlled currency
In March, we wrote about correlations between USD/RUB and other emerging markets in Europe like Hungary (HUF), Poland (PLN), and the Czech Republic (CZK). However, with the placement of the ruble as a controlled currency, Russia has avoided financial collapse and stabilized the ruble near pre-March levels, and these correlations no longer exist.
As mentioned in the rate sections above, USD/RUB and EUR/RUB stabilized over the summer to strengthen against both the US dollar and euro amidst the financial upheaval caused by global bans on Russian commodities like oil and wheat.
Capital controls enacted by Russia include a domestic interest hike of 1,050 base points that occurred just days after Russia’s invasion of Ukraine, and a requirement on Russian companies to exchange 80% of foreign currency revenue with Russia’s central bank for rubles.
Russian citizens are also prevented from moving foreign currency outside of the country and can only withdraw limited amounts of cash from Russia’s banks.
For future information on the status of USD/RUB and EUR/RUB, please follow our service updates page. In the meantime, you can trade many other currency pairs with competitive spreads with FOREX.com.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.