Ruble Facing Downside Risks From Belarus Political Crisis

The Ruble could be in for some hard times if the current political upheaval in Belarus takes another Ukraine-like turn. The political stalemate in Belarus is threatening to assume international dimensions, now that the European Union has waded into the crisis by declaring that it does not recognize the outcome of last Saturday’s poll.

So far, Russia has stood spat and has not made an official comment on the crisis. However, embattled President Lukaschenko has started to tinker with ideas that could make the Kremlin silent no more. Already, striking staff of the state-run television say they have been replaced with Russian staff, and Lukaschenko has started to ramp up anti-NATO rhetoric. In a security council meeting, Lukaschenko was quoted by the BelTA news agency as having told his defence ministry to track the “movements and intentions” of NATO in neighbouring Poland and Lithuania, 

NATO has denied any troop build up along Belarussian borders, but insists in a statement released on Tuesday that Belarus must respect fundamental rights. 

Analysts are worried that Russia could be drawn into the conflict and this could produce spillover risks on the Russian Ruble. According to Amy Zhuang of Nordea,. “a serious escalation to involve Russia military forces remains a tail risk, such a scenario cannot be ruled out and could have tremendous implications on the BYN and possibly the RUB…the close link between Belarus and Russia puts the RUB under risk”. 

The Ruble is starting to show signs of weakening against the greenback, with the USDRUB now trading at 74.408 or 1.36% higher on the day. 

Technical Outlook for USDRUB

The USDRUB is presently challenging the resistance at 74.602 (38.2% Fibonacci retracement from the swing low of 9 January 2020 to the swing high of 18 March). This move is part of the recovery move following the breakout of price from the falling wedge, which is about to hit the price objective of the measured move. A successful break of price above the current resistance, targets the 75.487 price target. 77.913 (23.6% Fibonacci retracement) forms the upside target, with 80.00 (March 2020 highs) looking like a future upside target of interest. 

On the flip side, the ascending trendline support that connects the lows from 22 June to date intersects the immediate downside target at 72.802. A breakdown of this level opens the door towards the 71.981 price level, with 70.611 and 68.661 forming new price targets.

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USDRUB Daily Chart

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