Oil is becoming more expensive, the ruble is becoming cheaper: what is the reason

Oil is becoming more expensive, the ruble is becoming cheaper: what is the reason

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World oil prices have begun to climb sharply in recent days, reaching $89.2 per barrel of Brent. But what’s strange about this story is that the domestic national currency, contrary to all expectations, did not strengthen as before. Quite the opposite: although not sharply, it continues to devalue smoothly. Over the past month, it weakened against the dollar by 0.9%, against the euro by 1%, and against the Chinese yuan by 0.5%.

Has the ruble started to “float” on its own, without being tied to oil?

According to Deputy Prime Minister of the Russian Federation Alexander Novak, the increase in world prices for “black gold” is also related to the situation in the Middle East. Although the balance of supply and demand in the market remains stable.

In early March, Russia announced that it was extending the voluntary reduction in oil supplies into the 2nd quarter of this year. In April-June, it will reduce hydrocarbon production and exports by 471 thousand barrels per day.

The OPEC+ Monitoring Committee has already welcomed this decision of Moscow. But what can it mean for our fellow citizens? If the government cuts supplies of “black gold,” how many petrodollars will we miss in the budget and how will this affect our income?

We are accustomed to the fact that as soon as world oil prices creep up, our ruble immediately begins to strengthen. We can say that this is a directly proportional relationship. Expensive oil means a strong ruble.

But today we are seeing the opposite situation.

How to explain this economic phenomenon?

According to financial analyst Sergei Drozdov, there is no phenomenon here, since there is nothing new under the sun. There have been periods in history when oil cost $100 per barrel, and the ruble in relation to the “American” was close to this figure.

“There is no direct correlation between the cost of oil and the ruble exchange rate,” he explains. – Unless when oil prices fall, the ruble necessarily becomes cheaper. There are many other factors that affect the exchange rate of our national currency.

– Which for example?

– The budget rule that the Ministry of Finance introduced in 2017. Then the ruble could still strengthen. However, it became one of the factors of its periodic weakening. For the reason that additional income from energy exports went to the National Welfare Fund. Hence the gradual devaluation of the ruble.

This rule still lives today. However, it is typical for all developing countries: any economic problems can be solved by weakening the national currency. Brent

So, you shouldn’t be strictly tied to non-oil prices. You can forget about the dollar at 70-80 rubles for quite a long time. Rather, our monetary authorities have developed a comfortable exchange rate – 93.5-93.6 rubles per dollar. This is the upper limit of the exchange rate.

“In my opinion, the situation with a slight weakening of the ruble is due to the fact that the gap between the supply of oil and the receipt of payments has increased,” said Nikita Maslennikov, a leading expert at the Center for Political Technologies. – It wasn’t very small anyway, it took up to several weeks. And since the beginning of this year, the gap has increased significantly.

Here we can talk about the impact of secondary sanctions that the West imposes on banks and settlement operators on the countries that purchase our hydrocarbons.

In my opinion, this is the main factor.

– Is this critical?

– No, we see this, including at the ruble exchange rate. It is relatively stable, within the range of 92-92.5 rubles per dollar. That is, when oil prices rise, our national currency does not strengthen, but there is no significant weakening of the exchange rate either. There is one more point, although not empirically confirmed. There were episodes when, along with the rise in oil prices, the dollar also sharply strengthened. Now, such a fortification is also not visible today.

– What will the ruble exchange rate be in April? Russia is reducing both production and exports of “black gold” in the second quarter. Will the ruble begin to weaken more actively?

– Based on the current situation, I believe that in April the ruble will maintain its current values ​​​​in relation to other currencies, it will be approximately in this corridor – 91-92 rubles.

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