Forecasts for the ruble exchange rate showed that it will remain weak

The ruble is stable against the dollar, the euro and the yuan – this boring-sounding phrase from the stock reports for July 14 applies to any day starting from Monday, July 10. The quotes of the Russian currency, as if having fallen into some kind of summer hibernation, if they are moving, then only by a penny in one direction or another. Why is this happening? It seems that this situation can last for a very long time, until the end of the year.

Recall that a year ago, in the middle of the summer of 2022, the market rates of the dollar and the euro were in approximate parity – at the level of 58. In the current realities, this figure seems to be some kind of “alien” from another life.

However, we must not forget: a year ago, the ruble was generally strong for the same reasons why it is weak today. Then the “toxic” Western banknotes were in minimal demand, today they are in great demand, then the export of Russian goods (primarily energy) was growing rapidly, and today it is falling uncontrollably. Another significant circumstance: in 2022, the story with a strong ruble, stubbornly not wanting to give up its positions, lasted at least from June to December, when the dollar was worth 65. But in January 2023, the rate began to “crumble”.

And something tells us that in the current federal budget deficit (which cannot be closed overnight), the exchange rate will not soon part with the marks of 90-91 per dollar and 100-101 per euro, reached by the second decade of July. When and under what conditions can this happen? We addressed these questions to financial market experts.

Sergey Drozdov, financial analyst:

“For me, the words of the Minister of Finance Siluanov, who said that since the dollar has grown in price, this year the state will reach its planned goals, the basic level of oil and gas revenues taken into account in the budget, are indicative.

Let me remind you that for the past ten years, the financial problems that have arisen in the country have been solved and regulated at the expense of a weak ruble. It has been calculated that it will be possible to reach an equilibrium, balanced budget this year only at a rate of 90 per dollar and above.

Unfortunately, we all have to get used to such a course. Moreover, the appetites of the Ministry of Finance will only grow, and he has always acted as a skirmisher in such cases; The Central Bank only occasionally took measures to protect the upper border of the currency corridor. The probability that, under some favorable set of circumstances, the dollar will go to the 85 area is small.

Against the ruble plays such a circumstance as the transition to international payments in friendly currencies. Part of the export earnings enters the country not so much in dollars and euros (which have become even smaller), but in the form of Chinese yuan, Indian rupees, UAE dirhams, and so on. This means that the inflow of hard currency to the stock exchange has decreased, and at the same time, the population and business show increased demand for it. As for oil prices, there is no direct correlation with the exchange rate, this factor does not work at the moment.”

Artem Deev, head of the analytical department at AMarkets:

“Indeed, the current exchange rate of the ruble against foreign currencies gives the state more opportunities in terms of replenishing the treasury. It would not be an exaggeration to say that it is even beneficial to the Ministry of Finance.

We see that in recent days, the dollar has stopped at around 90 -91 rubles, the euro has been holding around 101 rubles, and the ever-stable yuan, although it has added, is now trading a little at the level of 12.6 -12.7 rubles. Apparently, the ruble is reaching a certain “plateau”. I see that its rate will be moderately downward for about a month, but the market will “settle down” in the fall, and the classic dollar/euro currency pair will retain its values ​​against the ruble until about the end of the year.”

Nikita Maslennikov, Leading Expert of the Center for Political Technologies:

“I would not rush to accuse our monetary authorities of “dropping” the ruble artificially, in the interests of the budget. The head of the Central Bank, Elvira Nabiullina, is right: there is inertia in the story of its weakening, which was laid back in December 2022, when, as a result of the then sanctions, export earnings began to fall. As a result, since January 2023, the current account has decreased by 5.4 times.

As for the allegedly deliberate inaction on the part of the Ministry of Finance and the Central Bank, I want to note that on July 7, the regulator provided banks with 4.2 billion yuan ($586 million) to eliminate the shortage of foreign currency liquidity. It was a so-called “currency swap” operation, that is, a veiled intervention: since the yuan is pegged to the dollar, it is put pressure on it through cross rates.”

Andrey Loboda, economist, director of communications at BitRiver:

“The increase in the key rate by the Central Bank, expected on July 21, is likely to provide the ruble with only a short-term stability effect. The main factors of influence, I would include the monetary policy of two Western regulators – the US Federal Reserve and the European Central Bank, as well as the pace of China’s economic recovery, which leaves much to be desired.

Another circumstance is the imbalance in the foreign trade of the Russian Federation in favor of imports. The ruble will begin to strengthen as the budget’s oil and gas revenues rise. Until the end of the year, exchange rates are most likely in the following ranges: 80-100 rubles per dollar, 88-109 per euro, 11.2-13 per yuan.