Russia's Economy May Grow Again.

The Russian ruble has strengthened slightly in recent weeks following the announcement of import tariffs on countries that have imposed similar tariffs, such as the United States. Additionally, investors are closely monitoring ceasefire negotiations between Russia, the U.S., and Ukraine. The U.S. may also lift sanctions on certain Russian exports, including agricultural products and fertilizers. Since the beginning of the year, the ruble has appreciated by approximately 25% against the U.S. dollar, supported by hopes for easing geopolitical tensions and an improved inflation outlook.

Russia’s unemployment rate remained steady at 2.4% in February, slightly above market expectations of 2.3%. The number of unemployed individuals stood at 1.786 million, down slightly from 1.808 million in January. Labor shortages continue to affect several sectors, exacerbated by military conscription, which has increased employment in the defense industry. Additionally, migration following Russia’s invasion of Ukraine in 2022 has further reduced the labor force. The central bank considers these shortages a key factor in its decision to maintain high interest rates to control inflation.

Russia’s manufacturing PMI fell to 48.2 in March from 50.2 in February, marking the first contraction since September last year. This decline was driven by ongoing reductions in output and new orders. The PMI figures also indicate the sharpest contraction since 2022, pressured by declining sales both domestically and internationally. While employment slightly increased due to labor shortages, companies responded to falling output by cutting purchasing activities at a rapid pace.

Industrial production in Russia grew by only 0.2% year-on-year in February, down from 2.2% in the previous month, marking the weakest expansion since February 2023. Industrial activity contracted by 2%, as manufacturing growth slowed to 3.2% from 7% in January. Additionally, several key industrial sectors, such as mining, electricity production and distribution, and water supply, continued to show declining trends.

The Bank of Russia maintained its benchmark interest rate at a record high of 21% during its March meeting. The central bank also signaled that the current interest rate level is sufficient to curb inflation, despite persistent inflationary pressures fueled by demand exceeding domestic production capacity. However, Russia’s economy may experience a revival as economic relations between the U.S. and Russia improve.

Russia’s 10-year bond yields fell below 15% in March amid speculation that the Russian bond market may soon re-enter the global financial system. Additionally, foreign policy measures particularly under U.S. President Trump’s administration are pushing for a ceasefire in Ukraine under conditions favorable to Russia. This includes signals of restoring economic ties and lifting sanctions once the war ends. These optimistic prospects could lead to a rapid influx of new investments into Russia.

Techical analysis data (5H)

Resistance: 84.6651, 85.2191, 85.7632

Source: Investing.com

Buy/Long 1: If the price touches support in the price range of 83.0229 - 83.567 but cannot break the support at 83.567, you may set a TP at approximately 85.2191 and SL at around 82.4689 or according to your acceptable risk.

Buy/Long 2: If the price breaks the resistance in the price range of 84.6651 - 85.2191, you may set a TP at approximately 85.7632 and SL at around 83.0229 or according to your acceptable risk.

Sell/Short 1: If the price touches resistance in the price range of 84.6651 - 85.2191 but cannot break the resistance at 84.6651, you may set a TP at approximately 83.0229 and SL at around 85.7632 or according to your acceptable risk.

Sell/Short 2: If the price breaks the support in the price range of 83.0229 - 83.567, you may set a TP at approximately 82.4689 and SL at around 85.2191 or according to your acceptable risk.

Pivot point April 3, 2025 11:30 PM. GMT+7