Ruble in December: factors influencing the dollar exchange rate until the end of the year are named

On the first day of December, the dollar exchange rate on the Moscow Exchange exceeded 90 rubles. This happened for the first time since November 20. The euro ended the week at around 98 rubles. It is curious that before this, a number of experts assured that the exchange rate would remain below 90 rubles until the spring of 2024 and would not fluctuate much until the Russian presidential elections, which are due to take place in March. But it seems the ruble has its own plans. MK asked experts about what events affect its course and at what marks it will end December.

– What factors will affect the ruble in December?

Alexander Bakhtin, investment strategist at BCS World of Investments: “The ruble in December will continue to receive support from the mandatory sale by exporters of most of the proceeds and the factor of high rates. On the one hand, it is highly likely that the Central Bank may once again raise the key rate at its final meeting of the year (December 15), and this could enhance the positive effect for the ruble.

On the other hand, the 10 percent decline in oil prices in November compared to September-October has probably not yet affected the ruble and will still make itself felt in December. In addition, at the end of the year, specific factors that play against the ruble come into force. These include increased government spending, which must be completed by the end of December, and increased demand for foreign currency for the purchase of imported goods and foreign New Year trips. And yet, the factors supporting the ruble are fundamentally strong, which means we should no longer expect a significant appreciation of currencies this year.”

Natalya Milchakova, leading analyst at Freedom Finance Global: “A significant factor for the ruble exchange rate will be oil prices, especially their dynamics after the OPEC+ meeting held on November 30. The strengthening of the ruble will be affected by data on the balance of payments and oil and gas budget revenues, which improved significantly in the 4th quarter of 2023. In the third ten days of the month, the ruble will also support the tax period and the beginning of payments to the budget of a one-time tax on excess profits of corporations.

Obstacles to the strengthening of the ruble may be new sanctions and the geopolitical situation. In the middle of the month, from December 13 to 15, the Fed, the ECB and the Bank of Russia will announce their final decisions on interest rates this year, one after another. And if the Fed and the ECB are highly likely to keep interest rates at the same levels again, then the Bank of Russia will most likely again raise the key rate by 1-1.5 percentage points and, presumably, the foreign exchange market will react positively to this decision.”

Mikhail Vasiliev, chief analyst at Sovcombank: “The ruble has been strengthening against the dollar, euro and yuan since October 12, when it was announced the return of the mandatory sale of foreign currency earnings for the largest exporters. We consider this factor to be the main factor behind the fall of the dollar, euro and yuan over the past month and a half.

In addition, the ruble is favored by a strong trade balance (growing exports due to high oil prices and falling imports), as well as high ruble interest rates.

The increase in the key rate on October 27 to 15% led to an increase in the cost of loans, which reduces consumer and investment demand, including demand for imports (and reduces demand for currency).

In addition, an increase in deposit rates increases the attractiveness of ruble savings and increases the demand for rubles. According to the Central Bank, the average maximum rate on deposits of the ten leading banks of the Russian Federation, which attract the largest volume of individual deposits in rubles, rose to 13.64% per annum in the second ten days of November.

We expect that the Bank of Russia at its next meeting on December 15 will raise the key rate by another 1-2 percentage points, to 16-17% per annum, if inflation accelerates. Additional tightening of monetary policy is also positive for the ruble. Following an increase in the key rate, rates on deposits and loans will increase by a comparable amount.

At the same time, December usually has unfavorable seasonality for the ruble. The ruble may be weighed down by expectations of a further acceleration of inflation (up to 7.5-8% by the end of the year) and expectations of an increase in budget expenditures at the end of the year, which will lead to an increase in the ruble money supply and may be used to purchase imports. Also, at the end of the year, a number of market participants may intensify the purchase of foreign currency in order to sit out the long New Year holidays.”

– What will the ruble exchange rate be by the end of 2023?

Vladislav Antonov, financial analyst at BitRiver: “The fall of the dollar and rising oil prices support the ruble and help sellers defend the level of 90.3 rubles. As soon as the dollar consolidates higher, a weakening phase of the ruble will begin as part of the correction with a target around 94 rubles. If buyers cannot get past 90.3 rubles, then the US currency still risks falling to the key support zone around 86 rubles.”

Maxim Fedorov, investment advisor at Fontvielle Investment Company: “Apparently, the ruble has not yet exhausted its growth potential against the dollar, so by the end of the last month of 2023 it may show even greater strengthening, rushing to a new psychological level of 85 rubles. Relative to the European and Chinese currencies, it will probably also move to new levels of 95 rubles and 12 rubles, respectively, but not so actively.”

Mikhail Vasiliev, chief analyst at Sovcombank: “We believe that in the first weeks of December the ruble exchange rate may strengthen in the range of 86-88 per dollar, 95-97 per euro and 12.0-12.3 per yuan. And by the end of the year, the ruble may strengthen a little more and move into the range of 83-85 rubles per dollar, 91-93 per euro and 11.6-11.9 per yuan.”