Five barriers to the ruble: what will the exchange rate be in April

The national currency was surprisingly stable throughout March, fluctuating only slightly in the range of 90-93 rubles per dollar. Neither the presidential elections, nor mass drone attacks on domestic oil refineries, nor the Central Bank’s decision on the key rate, nor even the terrible terrorist attack at Crocus could unsettle the exchange rate. Will the ruble maintain stability, which is so unusual for it “in life”, in April? MK looked for an answer from financial analysts.

At the end of March 2024, the dollar to ruble exchange rate increased by 1.46%, to 92.48, the euro exchange rate – by 1.05%, to 99.65. The dynamics of the foreign exchange market as a whole for the month turned out to be very restrained, experts without exception note.

But April is preparing new tests for our national currency. Financial analysts interviewed by MK named five factors that could affect the stability of the ruble in mid-spring.

Firstly, this is unpredictable geopolitics, fraught with the arrival of “black swans” – events that no one expects and which cannot be calculated in advance. However, the reaction (or rather, the almost complete absence of it) of the foreign exchange market to the terrible events at Crocus showed that stock speculators no longer react to such factors in any way.

“For all the enormity of what happened at Crocus, this event almost did not affect the financial system, trade, or the economy as a whole. Everyone very quickly realized that there were no fundamental grounds for panic in the financial markets,” explains Maxim Osadchiy, head of the analytical department of BKF Bank. “No matter how cynical it may sound, currency speculators count money, not dead people.”

Secondly, the operations of the Ministry of Finance and the Central Bank on the open market for the sale and purchase of currency. Let us recall that a month ago the Ministry of Finance announced that it would increase daily purchases of foreign currency and gold by a billion rubles per day from March 7 to April 4. Thus, taking into account the operations of the Central Bank of the Russian Federation, daily injections of currency into the market amount to over 7 billion rubles. According to Sovcombank chief analyst Mikhail Vasiliev, sales of yuan from reserves within the framework of the budget rule will become a factor in supporting the ruble in April. “Until April 4, the Bank of Russia sells 7.1 billion rubles worth of yuan every day. Further, the Central Bank, according to our estimates, can reduce the volume of foreign currency sales to 5-6 billion rubles per day,” the expert predicts.

Thirdly, this is tax season. It has traditionally supported the ruble, as exporters sell large volumes of foreign currency in order to pay tax obligations in rubles. And in this sense, the beginning of April could be successful for the ruble, since the tax “harvest” is expected to be very significant.

Fourthly, these are oil prices. So far they remain at a fairly comfortable level for Russia, exceeding $85 per barrel. This is largely determined by the agreed position of oil exporting countries within OPEC+, including Russia. Earlier, Deputy Prime Minister Alexander Novak announced a voluntary reduction in our country’s oil production by 471 thousand barrels per day in the second quarter of 2024. In April, the production reduction will be 350 thousand b/d, and exports will be reduced by 121 thousand b/d.

“We expect Brent oil prices to remain in the range of $80-86 per barrel in April. Russian Urals oil will probably remain around $70 per barrel,” predicts Mikhail Vasiliev. According to him, high oil prices will support the influx of foreign currency into the country in April and budget revenues.

Fifthly, a possible waiver of the mandatory sale of foreign currency earnings. For now, the mandatory sale of foreign currency earnings by exporting companies, introduced by presidential decree, is in force in the Russian Federation. But there is still no confirmation that the measure, valid until April 30, 2024, will be extended. Apparently, there is no consensus on this issue at the very top. The government is in favor of extending the measure until the end of the year, but the Bank of Russia does not see compelling reasons for this, as Elvira Nabiullina, head of the Central Bank, has repeatedly stated. If the decree is not extended, sales of foreign currency on the domestic market will decrease, and accordingly, the ruble will most likely enter a new phase of weakening.

“A lot depends on this decision,” says Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers. – The Central Bank is definitely against it, the Ministry of Finance is definitely for it. Let’s wait and see whose arguments are stronger. I don’t think that the exchange rate will change dramatically in April, but it is obvious that a foreign currency shortage is forming in the foreign exchange market.”

What is the final forecast of experts for the April ruble exchange rate? None of the respondents expect any sharp fluctuations. Both Alexander Potavin from Finam and Mikhail Vasiliev from Sovcombank practically agree that until the end of April the rate will be stable: in the range of 90-95 per dollar, 98-103 per euro. Analysts expect more serious progress only by the end of the year, calling possible milestones for the dollar around 100 rubles and the euro at about 110.