In the absence of statements from the Russian authorities, the foreign exchange market updated its two-month high

At the beginning of the week, the dollar exchange rate at exchange trading reached a one-and-a-half-year high, rising above the level of 102 rubles/$. However, the speculative game was not successful; at the end of the day, the rate returned below the level of 100 rubles/$. In the absence of new measures to support the ruble exchange rate, analysts assume a short-term rise in the exchange rate to 104–107 rubles/$.

In the absence of any statements or actions by the Russian authorities, market participants not only drove the dollar exchange rate above 100 rubles, but also managed to update the two-month maximum. At the Moscow Exchange trading on Monday, October 9, in the first half of the day, the American currency rate reached 102.35 rubles/$, exceeding by 1.95 rubles. Friday’s closing value and updating the maximum since March 2022. The local maximum rates of the yuan (more than 14 rubles/CNY) and the euro (more than 108.03 rubles/€) have been updated.

Fluctuations in the exchange rate are caused by the active play of speculators, who spent the past week testing the level of 100 rubles/$. This level was designated by financial authorities as undesirable in mid-August. After overcoming it on August 15, the Central Bank raised the key rate by 350 basis points to 12%, and exporters were advised to sell foreign currency on the domestic market. “It is possible that the authorities do not see the advisability of introducing tough, but short-term measures to limit capital flows abroad,” notes Vladimir Evstifeev, head of the analytical department of Zenit Bank.

The absence of new steps to support the Russian currency, Mr. Evstifeev believes, allows speculators to test levels above 100 rubles. This is supported by the sharp increase in trading volumes and amplitude of movement immediately after the dollar exchange rate surpassed the maximum set on August 14. “At this time, many algorithmic trading systems simultaneously worked to buy currency and shorts on the currency were closed,” notes Sovcombank chief analyst Mikhail Vasiliev.

The speculative play against the ruble at the beginning of the day was supported by an increase in demand for currencies from importers. As Evgeniy Loktyukhov, head of the economic and industry analysis department at PSB, notes, this was facilitated by the end of the holidays in China. “Military conflict in the Middle East also stimulates the activity of speculative capital,” notes Mr. Loktyukhov.

However, in the afternoon, like last week, many speculators decided to close positions and take profits. By 18:00, the dollar exchange rate had fallen below the level of 100 rubles/$, and in the last hour of trading it reached its minimum since October 2 – 98.84 rubles/$. At the end of the day, the rate stopped at 99.32 rubles/$, having lost over 1 ruble during the day. The yuan finished trading at 13.6 rubles/CNY, the euro exchange rate was 104.75 rubles/€.

A Kommersant source on the stock market believes that soft management of the exchange rate by financial authorities through their intervention capabilities and market participants could spur sales.

Such support measures may temporarily cool the ardor of speculators, but will not discourage the desire to make quick money, since the current supply of foreign currency from exports is not enough to satisfy the demand for foreign currency for the purchase of imports and for capital outflow.

Such rapid fluctuations in rates took place with high trading activity. Moreover, the main turnover occurred at the end of the trading session. As a result, the daily volume of dollar trading exceeded 138.5 billion rubles, and the yuan reached 185 billion rubles, reaching new highs for a month and a half.

Mikhail Vasiliev admits that the authorities will negotiate with business to increase the supply of currency to stabilize the exchange rate, but without “sharp movements” in the field of currency control. In addition, he expects the key rate to increase by 100–200 basis points by December, to 14–15%. “In a risk scenario, if the dollar exchange rate approaches 110 rubles/$, the key rate may be increased to 17–20%,” says Mr. Vasiliev. According to Vladimir Evstifeev, the nearest target may be a level of 104–107 rubles/$.

Vitaly Gaidaev