“The dollar exchange rate may return to 90 rubles”

Financial analysts gave a forecast of the value of the national currency

The Ministry of Economic Development expects the weakening of the Russian currency against the dollar to 66 rubles by the end of this year. Such data appear in the forecast of the socio-economic development of the country for 2023-2025, prepared by the department. This means that the Russian national currency will lose an average of 2 rubles per month against the “American”, and by December it will become cheaper by 8-10%. How realistic is such a scenario, “MK” decided to find out from financial analysts.

Alexey Fedorov, TeleTrade analyst:

“The forecast of the Ministry of Economic Development regarding the average dollar exchange rate by the end of 2022 – 66 rubles per unit – looks unrealistic. The cyclical recession of the global economy is intensifying and during the fourth quarter will enter an acute phase in the financial markets, the geopolitical situation remains tense. Russia is waiting for new sanctions, including the “ceiling” of oil prices. Plus, the market price of oil will tend to range between $40-60 per barrel of Brent, since during cyclical crises, commodity quotes are under very serious pressure. Which, in principle, leads to a protracted decline in raw material prices by 50 percent or more. For a potentially deficit Russian federal budget for 2022, this means two options: either the Ministry of Finance will have to borrow the missing funds on the domestic market, or, together with the Central Bank, weaken the ruble to compensate for the shortfall in revenues. The conditions for the implementation of the first option are extremely unfavorable today, which is why Siluanov’s department recently refused even a trial placement of federal loan bonds (OFZ). All that remains is to weaken the ruble, and it was not in vain that the Ministry of Finance earlier announced its intention to start buying foreign currency as part of the budget rule this year.

Past cyclical crises took place for our country in more favorable conditions and in the presence of significant gold and foreign exchange reserves. It is highly likely that by the end of 2022 the ruble exchange rate will fall much more than the Ministry of Economic Development predicts. Considering that market volatility will be prohibitive in the fourth quarter, the dollar exchange rate may return to March values ​​of 90 rubles or more.”

Vladislav Antonov, financial analyst at BitRiver:

“The strong ruble is absolutely unprofitable for the government, but the situation with the exchange rate has not changed for a long time. In the summer, the Ministry of Economic Development outlined a comfortable dollar exchange rate in the range of 70–80 rubles. But, as we can see, its current value is 54-55 rubles, and the forecast for the end of the year – 66 rubles per dollar – is significantly lower than those summer benchmarks. On what basis the department cites precisely such figures is not explained, therefore it is now difficult to take its calculations seriously. The situation on all exchanges is uncertain, investors expect a global recession. The risks of imposing sanctions against the National Clearing Center have increased. If this happens, the Moscow Exchange may suspend trading in the currencies of unfriendly countries. How the course will then be formed is not at all clear. Any forecasts in the implementation of negative scenarios lose their meaning.”

Artem Deev, head of the analytical department at AMarkets:

“Now the exchange rate of the ruble, in addition to geopolitics and sanctions, is affected by the balance of supply and demand for the currency within the country. Most likely, the Ministry of Economic Development expects the weakening of the ruble due to the previously announced foreign exchange interventions, which will lead to an increase in demand for foreign currency in Russia. But we must also take into account the threat of new US sanctions against the structures of the Moscow Exchange. As a result, currency trading on the domestic market may be stopped for some time, and subsequently the ruble exchange rate will be actually regulated manually, since market mechanisms will stop working. Meanwhile, the Russian budget needs a gradual strengthening of the “American” to a mark of at least 70 rubles per unit, since a too strong national currency hits the income of exporters and, accordingly, revenues to the treasury. So the forecast of the Ministry of Economic Development regarding the exchange rate of 66 rubles per dollar by the end of the year may well correspond to reality.”