Steep route of the ruble: what caused the fall of the national currency

Experts explained the reasons for the June rise in price of the dollar and the euro

By the June holidays, the ruble noticeably lost its positions, only in the last week having fallen in price against the dollar by 1.7 rubles, and against the euro – by 2.5 rubles. Over the month, the declining curve of the national currency looks even steeper: the dollar has risen in price over this period from 76 to 82.6 rubles, and the euro – from 83 to 89 rubles. What explains such dynamics in the foreign exchange market? Will the fall of the ruble stop soon and at what levels? What will be the course in the near future? With these questions, “MK” turned to financial market analysts.

Alexander Dzhioev, analyst at Alfa Capital Management Company:

“The dynamics of the ruble exchange rate is explained by several factors. First, it is a delayed reaction to the previous wave of falling oil prices. A barrel of Brent fell below $72, which is now, after a couple of weeks, taken into account in the value of the ruble. Secondly, recently there was information from the Ministry of Finance about the sale of a large amount of yuan on the open market in the new reporting period. This means that by selling the funds of the NWF, the department covers the lost income from exports. This goes against market expectations as many assumed that exports were about to pick up.

The technical picture of trading in the US dollar does not currently imply a breakdown of the level of 83 rubles upwards. Already, the ruble looks oversold and is ready for a correction. The US dollar may return to the range of 80-82 rubles, the euro – to the corridor of 86-88 rubles. The amplitude fluctuations of the exchange rates observed now look excessive”.

Artem Tuzov, Director of the Corporate Finance Department at IVA Partners Investment Company:

“The ruble is gradually losing value against all major world currencies. So far, the trend is such that by the end of June, the domestic currency may depreciate to the level of 85 rubles per dollar, 92 rubles per euro and 11.8 rubles per yuan.

Now one of the significant sources of pressure on the ruble is the withdrawal of foreign capital from Russia. The ruble has already depreciated on the deal with Shell, and now it may be depreciating on the deal with Yandex. At the same time, the external news background also does not bode well for the ruble. Exports are declining. Resource prices are going down. However, the vast majority of Russians live in the ruble zone and will not notice the difference in rates. But citizens who prefer foreign resorts and imported goods will feel it on their wallets.”

Vladislav Antonov, financial analyst at BitRiver:

“Since the Central Bank left the key rate unchanged at 7.5% the day before, this decision will not affect the foreign exchange market in any way. The dollar exchange rate against the ruble in June 2023 can be traded in the range of 76-83.5 rubles. According to the extended range, the upper limit for June is 86 rubles. The yuan is strong on the Russian currency market. The demand for it is associated with an increase in the number of financial instruments in yuan available to retail investors, as well as with an increase in the share of Chinese money in foreign economic settlements and transactions in the foreign exchange market. For the Chinese currency, you can designate a trading range in the first month of summer between 10.8 and 12 rubles. For the euro / ruble pair, the operating range is 82–91 rubles. The worst-case scenario for the ruble against the euro is a fall to 92.6 rubles.”

Arthur Meinhard, Head of Analytical Department for Global Markets at Fontvielle Investment Company:

“Currently, the main factor affecting the ruble exchange rate is the volume of currency supply on the market. If earlier the rise in oil prices strengthened the national currency due to the increase in petrodollars received by Russian exporters, now, with the oil price ceiling of $60 per barrel introduced by Western countries, the supply of foreign currency to the market has decreased. Regardless of how much oil may rise, Russian oil producers deliver only within the price ceiling.

With the growth of imports and demand for currency from individuals, the Russian ruble will continue its downward trend. In addition, a significant budget deficit, which was formed due to a 50% drop in oil and gas revenues to 2.85 trillion rubles from January to May 2023, is forcing the government and the Bank of Russia to put up with further devaluation of the ruble. It is the easiest way to correct the budget deficit, at least partially.

As for the forecasts of currency quotes for the end of June, I see no reason for significant changes in the exchange rate. Since there will be more active sales of foreign currency by exporters to pay taxes. By the end of this year, I expect that the US dollar will cost in the range of 88-92 rubles, and the euro – in the corridor of 94-98 rubles.