A dollar for 90 rubles: when and under what conditions it will happen

Since the beginning of the year, the value of the Russian currency has fallen by more than 20%. If in mid-January the official dollar exchange rate did not reach 68 rubles, then after the May holidays its quotes confidently fixed above 80 rubles. Several factors are mentioned among the reasons for such a sharp peak: the preparation of a new package of anti-Russian sanctions, the growing federal budget deficit, the emerging investment hunger in the economy, and the low financial return of the previously highly profitable raw material component. Under these conditions, according to a number of analysts, there are all prerequisites for the fall of the national currency to the level of 90 rubles. When and under what conditions can this happen? With such a question, “MK” turned to the experts of the financial market.

Kirill DRONOV, Managing Director of Alfa-Forex:

“The strengthening of the Russian currency against the dollar, euro and yuan, observed at the end of April, ended near the levels of 75, 82 and 11 rubles, respectively. Further, the ruble did not dare to strengthen, “fearing” the consequences of the 11th package of Western sanctions. The G7 countries are expected to agree on new restrictions at the ongoing Hiroshima summit. The new restrictions promise to address commercial loopholes that Moscow uses to circumvent existing measures, which could negatively affect all chains of foreign trade. However, the main problem for the Russian currency remains the risks of the growth of the budget deficit associated with the fall in oil and gas revenues. The Ministry of Finance reported that in the first 4 months of this year, tax revenues from the sale of energy resources fell by half – to 2.3 trillion. rubles, and the total budget deficit by the beginning of May reached 3.4 trillion. rubles with an annual plan of 2.9 trillion. rubles.

The shortfall in oil and gas revenues will have to be compensated for by increasing hydrocarbon exports, which have already reached record volumes that have not been observed since February 2022. As long as world prices for “black gold” stay above $70 per barrel of Brent, and the Russian mixture Urals, taking into account discounts, costs more than $50, the probable scenario of reducing the budget deficit due to the devaluation of the ruble will most likely not continue. So far, there are no grounds for another jump in the value of the dollar, but given the possible fall in commodity incomes and the expansion of budget holes, the dollar will be able to crawl up to 90 rubles, as the experience of exchange trading shows, in any summer month, and it will not take much time for such a breakthrough.

Vladimir CHERNOV, analyst at Freedom Finance Global:

“If there are no new geopolitical upheavals or a serious increase in external pressure, then it is not worth preparing for the dollar exchange rate at 90 rubles in the near future. Hopes are linked to a reduction in the discount on Urals, an increase in export volumes, as well as an expected increase in world prices for raw materials in the second half of the year. The current account surplus in Russia’s trade balance will increase again, which will lead to the strengthening of the ruble. This will become especially noticeable if import volumes start to decline. There are very high risks in this matter due to the 11th package of anti-Russian sanctions, in the list of which there is supposedly a clause on the prohibition of any import into our country. If such a cardinal decision is made by the West, then the ruble quotes will continue to decline, and the pace of this process will grow.

The Russian government has plenty of ways to stabilize the ruble – many of them, which were used last year, led to a very serious strengthening of the national currency. Among the main measures, it is worth noting the introduction of a rule on the mandatory sale of foreign exchange earnings. At first, exporters were obliged to sell at least 80% of their revenue on the stock exchange, then they lowered the bar to 50%, and at the beginning of 2023, this condition was completely canceled. A similar effect could be seen in the example of the sale of Russian gas for rubles: export cash tranches were immediately converted on the stock exchange, which increased the demand for our national currency and increased its market value. Russian monetary authorities may use similar methods this year if geopolitical realities begin to weaken the ruble too sharply.”

Sergey RAMANINOV, economic analyst:

“I will not talk about the level of 90 rubles per dollar, while the participants in the trading sessions expect a gradual weakening of the Russian currency within 85 rubles per dollar before the end of this year. There are no fundamental reasons for the explosive growth of the rate of American banknotes, but traders see how the rate changes dramatically depending on the exchange turnover of foreign exchange earnings. In April, Russian exporters kept a fair amount of dollars and euros on their balance sheets. As a result, the volume of net sales of foreign currency by the largest domestic companies decreased by 42%, while the dollar rose by 5%. The growth of imports from friendly countries also speaks in favor of the weakening of the ruble. Purchases of goods from China in April increased from $5 billion to $9.6 billion compared to the same period last year. Activation of the movement of financial flows for the withdrawal of capital from Russia risks becoming a long-term trend, so the exchange rate in the region of 85 rubles per dollar may turn out to be the best gift for Russians for next Christmas.”

Artem SHAKHURIN, expert of IC “IVA Partners”:

“The exchange rate of the ruble against the dollar and the euro has become more volatile, but this, first of all, reflects the reduction in liquidity for these currencies in the domestic market. Sales of currencies by exporters are declining due to the reorientation of flows to alternative markets. At the same time, less and less dollars and euros are required for transactions, both for importers of goods from friendly countries and ordinary citizens, in particular, for the formation of savings or foreign trips. Some currency surges occur during the exit of foreign companies from Russian assets, but this exchange activity is of a local nature.

In many ways, the future of the ruble, as well as the entire Russian economy, will depend on the 11th package of Western sanctions. Our country has learned to overcome the introduced restrictive barriers, however, secondary sanctions addressed to friendly trading partners run the risk of putting additional pressure on the export-import mechanisms established in the new conditions. Against this background, the dollar for 90 rubles, most likely, we will see already this year, and how long-term failures to this level will be will show Russia’s ability to survive in the face of an increasing economic blockade.

Of course, the Russian government will always find methods to support the national currency, regardless of sanctions or falling commodity prices. But it is unlikely that officials have a desire to use these tools. A weak ruble supports exporters and import substitution, and also makes it easier to fill the budget. In this regard, the negative effect of the weakening of the national currency, according to our monetary authorities, is smoothed out, especially since the dollar and the euro play an ever smaller role in the life of Russians.