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Trading Forex- Russian Ruble, the next commodities currency

By : Mike P. Kulej
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There are some currencies known in financial circles as "commodities currencies". Their fortunes seem to be rising an falling in tandem with prices of raw materials. These are the "other dollars" CAD, AUD and, to a smaller degree, NZD.

These countries are large producers and net exporters of a wide range of physical commodities. Oil and gas, metals, forestry and a myriad of agricultural products are imported from those countries by the rest of the world, especially exploding Asian economies. Growing consumption is followed quickly by rising prices of those materials. That, in turn, pushes currencies in exporting countries to appreciate in value. Huge run ups in AUD, CAD and NZD over last few years were the direct result of this phenomenon.

Than there is Russia. Since the break up of Soviet Union and virtual collapse of its economy, a lot of changes have taken place. Privatization brought much needed capital and improvement. Obsolete plants were either closed or modernized. Rising commodities prices brought Russia to the top level of world exporters in many, if not most, industrial commodities. (We will omit Russian political situation and it's impact in this discussion.)

Second largest exporter of oil and largest exporter of natural gas. When it comes to metals they are leading producers of nickel, palladium, titanium, cadmium, tungsten. Russia ranks very high in production of copper, aluminum, steel, gold, silver and a long, long list of other metals. Same with timber. One must also remember that only a small portion of natural resources there has been tapped or even properly surveyed. In a few short years Russian foreign currencies reserves grew from about 70 Billions to well over 400 Billions at this writing and growing.

Russian Ruble(RUB) responded very favorably to these events. It appreciated in value against USD from 32/$ to 25/$ since 2004. Granted, it's not a fully free traded currency. Very few brokers offer it, spread is wide. Definitely not an instrument for active trading. Lack of historical data makes it difficult to set targets and conduct any meaningful technical analysis. It is, however far more accessible and more freely floating then Chinese Yuan.

Long term traders, with a taste for the exotic, might want to pay attention to RUB. With volume steadily on the rise and growing need for raw materials, who knows? Perhaps in 5-6 years it will achieve the stature of NZD or even AUD.

About the author:
Mike Kulej is a Chief Forex Strategist for Spectrum Forex LLC., and a creator of highly effective "Rainbow" trading system. He specializes in mechanical trading systems as explained on forex.com." target=_blank>www.spectrumforex.com. Spectrum Forex LLC offers numerous services to individual traders. With questions and comments e-mail him at forex.com">kulej@spectrumforex.com.


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