Despite initially breaking above the 80 barrier early this morning, USD/RUB has traded lower over the course of the morning, currently down 10.4% at 79.22.

We are seeing this as being driven by three factors. Firstly, aggressive short covering from investors that were short RUB and wanted to take profit around the 80 level. Closing these trades requires buying RUB.

Secondly, the movement higher in oil. With Brent oil taking a look above $99 earlier, an exporting nation like Russia benefits from the price increase, helping the currency to gain.

Finally, we do note some rationale to ‘buy the rumour sell the fact’. Markets have bene pricing in rising tensions for a few weeks now, so we feel that RUB was already being pushed beyond fair pricing before the headline hit.