The Central Bank explained the reasons for the depreciation of the ruble in December – Kommersant

The weakening of the ruble by 1% in December 2023 was also influenced by a seasonal increase in demand for foreign currency and a fall in oil prices, according to the December “Review of Financial Market Risks” (.pdf), prepared by the Central Bank. According to the regulator, over the past month, Russians made a record net purchase of foreign currency worth 179 billion rubles for the entire year—almost the entire volume was in US dollars and euros.

As reported in the Central Bank’s review, the decline in the ruble is also explained by the influence of operations to buy out property rights from companies from unfriendly countries. “These factors, along with concerns about increased sanctions pressure, contributed to the emergence of short-term periods of deficit in the overnight exchange-traded currency swap market,” the regulator said.

Of 179 billion rubles. net purchases made by Russians last month, currencies worth 90.2 billion rubles were purchased on the exchange market, and 88.8 billion rubles were purchased through the largest banks. The Central Bank notes that the main sellers of currency on the market remained systemically important credit institutions (SICs), engaged in the sale of foreign currency earnings of exporters. Over the past month, they realized a net sale of currency on the Moscow Exchange for 588.2 billion rubles. In November 2023, this figure was 14% lower.

According to the regulator, the volume of net sales of foreign currency by the largest exporters in December increased to $14.8 billion, which is 6.6% more than in November ($13.9 billion).

For December 2023, the average dollar exchange rate was 90.81 rubles. On December 7, the dollar reached a maximum of 92.78 rubles, the minimum value was observed on December 1 – 88.58 rubles. The average euro exchange rate was 99.17 rubles. On December 26, the euro exchange rate was 101.57 rubles, the lowest value was recorded on December 1 – 96.88 rubles. According to the Central Bank, the real effective exchange rate of the ruble against the currencies of Russia’s main trading partners decreased by 0.5% in December compared to November.

Previously, the Central Bank reported that in November 2023, Russians’ demand for cash rubles decreased, and foreign currency gained popularity. As of December 1, its volume in the hands of the population in ruble terms amounted to 8.6 trillion rubles. (or $96.8 billion in dollar equivalent at the Central Bank exchange rate as of December 1). According to the Central Bank, in November the monthly increase in the volume of transactions in cash foreign currency amounted to 83 billion rubles, the maximum since March 2022.

Read more in the Kommersant article. “The currency changed hands”.

Polina Motyzlevskaya