(Deutsche Bank)

The Russian ruble's had a good couple of months.

It's been one of the best performing currencies in the wake of the oil price rebound.

Brent prices have soared by about 75% since mid-January, while the ruble has strengthened by about 20% against the dollar in the same time frame.

And the FX team at Deutsche Bank thinks the ruble still has some room to go.

"We recommend going long RUB vs. basket (0.55 USD + 0.45 EUR), as crude stabilization should continue to drive carry-seeking inflows and shift the focus to improving macro fundamentals," wrote a Deutsche Bank's Gautam Kalani in a recent note to clients.

"Growth and activity data are improving, current account is in surplus, FX reserves are more than adequate, inflation is moderating, and the CBR remains relatively hawkish," they added.

The ruble has historically tracked Brent crude prices closely. Or, in English, whenever oil has rallied, the ruble has strengthened — and vice versa.

However, interestingly, Kalani argues that even if oil prices don't continue to surge, the ruble might still have some room to go.

Via his note (emphasis ours):

"RUB has the highest beta in EM FX to crude, and thus if crude gradually grinds higher, RUB is in prime position to benefit. Long RUB is a relatively clean, high carry way to position for a crude pickup. Even if crude does not pick up appreciably but remains steady within the current range, expectations of a major crude downturn (a real worry in January) will continue to fall. This would encourage carry-seeking inflows into RUB, and also turn the focus to the improving macro fundamentals. Further, RUB has outperformed EM FX since March, as crude has grinded higher while S&P has faltered: we expect this to continue as crude has decoupled from S&P (and thus RUB has decoupled from broad EM FX)."

Notably, the Deutsche Bank FX team isn't the only group of people going long the ruble.

Zach Schreiber, the CEO of PointState Capital who made $1 billion betting against oil two years ago, announced at the Sohn Investment Conference that he's long the Russian currency.

And, moreover, Bloomberg's Elena Popina reported that managers are various funds around the world have been buying Russian ruble assets.

(Capital Economics)

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