Ruble’s spectacular rally soured by US election investigation

Since the Republican candidate Donald Trump won the US Presidency on November 8th, the Russian ruble outperformed not only many of its emerging market peers but developed market peers as well, despite a bull run of the dollar. Since the election, the Ruble gained almost 11 percent against the dollar and more so against the euro and the pound. There have been two factors behind this rally; the OPEC and non-OPEC oil deals that pushed the oil price higher and the one being the possibility of an improvement in the relations between Russia and the United States, which could finally end some of the sanctions imposed on Russia by the United States.

However, since the elections, the opponents of Mr. Trump, the Democratic Party lawmakers, and the mainstream media have tried to accuse him of acting on behalf of the Russian President Vladimir Putin. Some even called him a Russian spy. The situation got complicated as it was revealed that Mr. Trump’s national security advisor Michael Flynn had contacts with the Russian ambassador to the United States and talked on sanctions before being formally inaugurated to the office. Mr. Flynn resigned after it surfaced that he misled the US Vice President Mike Pence with regard to his conversations with the Russian ambassador. This week, President Trump’s attorney general Jeff Sessions had to recuse himself from any investigation into Trump’s campaign’s alleged contacts with Russia as he seemed to have contacts with the Russian ambassador during the campaign, though it was perfectly legal for him to do so as a senior member of the Arms Services Committee.

The lawmakers at congressional judiciary and intelligence committees are currently conducting probes into Trump-Russia connections. As the market participants fear that with so much domestic pressure, Mr. Trump might not succeed in his promise to restore relations with Russia, the spectacular rally in the ruble is crumbling. It has lost more than 1 percent over the past three trading days against the dollar.