Alfa-Bank predicts the ruble exchange rate in the range of 70–80 rubles/$1 in 2023

Economists at Alfa-Bank expect the ruble to weaken in 2023 and shift towards the corridor of 70–80 rubles/$1. Experts emphasize that in order to maintain the competitiveness of the Russian economy, the ruble exchange rate should be weaker, not stronger.

“The dynamics of the real effective exchange rate of national currencies across countries indicates that the ruble appreciated very strongly in the second quarter of 2022, due to which it became incomparably stronger than other major emerging market currencies. It is quite clear that, given the sanctions and logistical problems, this strong ruble exchange rate may persist for some time, but a currency that is too strong is a vulnerability factor. We continue to expect that the ruble exchange rate will shift to the corridor of 70–80 rubles/$1 in 2023,” Alfa-Bank said in its forecast (quoted by Interfax).

Experts note that they did not notice a radical decrease in the population’s interest in foreign exchange instruments. The share of foreign currency deposits of Russian citizens decreased from about $90 billion in previous years to $60 billion in September 2022. At the same time, the amount of cash in circulation increased by $10–13 billion, experts report.

According to Alfa-Bank economists, since the beginning of the year, corporate foreign currency accounts have decreased by $28 billion, but about $150 billion still remains on the accounts of Russian companies. believe that the preservation of foreign currency balances on accounts primarily indicates the attitude towards the currency as an instrument for the placement of funds. According to experts, in the face of uncertainty, it is unlikely that bank customers will massively switch to the ruble.

Alfa-Bank believes that a possible weakening of the Russian currency will not be an important factor in the inflation trend in 2023. Experts predict a decline in annual inflation below 4% in April 2023, to about 2-3% y/y. The postponement of the indexation of housing and communal services tariffs from July 2023 to December 2022 testifies to the expectation of a sharp drop in inflation, Alfa-Bank experts report. A sharp slowdown in inflation on the eve of the presidential election in March 2024 is a highly desirable outcome for the authorities, economists added. Experts left the inflation forecast at 6% at the end of 2023.

Forecast of the dynamics of the ruble exchange rate at the end of 2022 – in the material “Kommersant FM” “Seasonal Weakness”.