The dollar exchange rate began to rise again: “spells” did not help the ruble

The ruble was never destined to reach the level of 85 per dollar: having stopped at 88, the Russian currency began to fall again in December. And the euro at auction at the time of writing this material rose to 100 rubles for the first time since October.

The reasons can be anything – be it fundamental, be it opportunistic, be it technical or be it irrational. But the main exchange rate for the ruble, which has been proven over decades, is, alas, one – in the direction of weakening.

The exchange rate has stabilized and will remain within the current parameters, Finance Minister Anton Siluanov said in early November. According to him, currency control measures taken by the government played an important role in this. In turn, the head of Sberbank, German Gref, determined the fundamental exchange rate of the ruble in the region of 85-90 per dollar: “We have no expectations that it will go anywhere far from these levels.” But the chief economist of Alfa Bank, Natalia Orlova, suggested: in December, the Russian currency will continue to weaken, being in the 90-95 corridor, and in 2024 it will trade in the 100-110 range.

Any forecasts, we note, are a thankless task, and in the case of the ruble, it is three times thankless. Who could say with confidence in January 2023 that by December the rate would be 90, having gone from 70.3 rubles per dollar?

The simplest, most superficial, but on the whole absolutely correct explanation of why the domestic currency weakens or strengthens in relation to the foreign currency is the following: the demand for it in the economy is constantly changing. It began to lose ground on November 30, at the end of the tax period. Exporters were no longer required to sell additional volumes of currency in order to pay taxes in rubles and other expenses in the form of salaries, personal income tax, and social contributions.

At the same time, a seasonal, pre-New Year factor could also play a role: traditionally in December, importing companies purchase especially many goods for the future. But it’s not just these two circumstances.

“It’s very bad when our currency reaches new levels of weakening, even if it doesn’t stay there for long,” says financial analyst Sergei Drozdov. – Sooner or later she returns there, signaling to the market and price tags in stores: get used to it! Accordingly, all statements that the exchange rate does not affect inflation are fairy tales.

If the ruble now rolls back to 92.2 per dollar, then it’s a stone’s throw to 95. By raising the key rate, that is, acting as simplified as possible, the monetary authorities are driving down prices only in their notebooks, but not on retail shelves. At one time, the Central Bank determined the upper limit for the weakening of the ruble at 102 per dollar, but this will not work with the lower limit; it will be “assigned” by the market, not the state.”

Now there is a lot of talk about how we will have a strong ruble by the March elections. This is a good thing, but there is also the force of habit. People, the state, and business as a whole have adapted to the current exchange rate, and there is a high probability that we will not see any 80-85 per dollar in the coming months, Drozdov sums up.

“The situation of a new weakening is due to a number of circumstances: firstly, the tax period has ended in Russia, and secondly, the global oil market is showing weak dynamics,” notes Valery Tumin, director of Russian and CIS markets at fam Properties. – OPEC+ countries were unable to have a significant impact on pricing, and record production in the United States removed the threat of a global shortage of raw materials.

In addition, December is not the best time for the ruble due to increased demand for foreign currency among tourists and importers. However, it is unlikely that under the conditions of the Central Bank’s strict monetary policy, the emerging strengthening of the dollar and euro will develop into a long-term trend.”

Director of the Center for Structural Research at RANEPA Alexey Vedev still believes that the ruble will strengthen to 85. And what is happening now will not last long, as it is associated with market factors: in particular, in November, Brent oil quotes decreased compared to September-October by 10%, to $80 per barrel. Accordingly, sales volumes of foreign currency earnings by exporters have also decreased. As for potential measures to influence the exchange rate by the state, they can be taken only after the dollar overcomes the 95 ruble mark.