The dollar peeked out of the corridor – Newspaper Kommersant No. 148 (7349) dated 08/16/2022
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On August 15, the American currency rose above 61 rubles/$, leaving the narrow corridor in which it has been trading for the past two weeks. This was facilitated by the fall in oil prices and the expectation of OFZ sales by foreign investors. However, experts believe that with the beginning of the new tax period, the supply of foreign currency will increase again, and the dollar exchange rate may return to 58–60 rubles/$ by the end of the week.
The Russian currency market began the new week with a sharp weakening of the ruble. Already at the opening of trading on August 15, the dollar exchange rate rose by almost 65 kopecks on the Moscow Exchange, to 61.3475 rubles / $, and by 14:00 it reached 61.6825 rubles / $ – the maximum since August 1. As a result of trading, the US currency stopped at 61.23 rubles / $, which is 62 kopecks. higher than the previous day’s close. The euro exchange rate rose by 4 kopecks, to 62.35 rubles/€. The yuan also rose in price by 4 kopecks, to 9.03 rubles.
As a result, only the US currency left the narrow corridor it had been in for the last two weeks. Since the beginning of the month, the dollar exchange rate has remained in the range of 60–60.7 rubles/$. At the end of July, volatility was many times higher, then on some days intraday fluctuations reached 2-3 rubles.
However, the holiday season and the decline in exports led to the fact that in early August, demand began to balance the supply of foreign currency.
The weakening of the Russian currency occurred against the backdrop of falling oil prices. On Monday, the cost of the nearest contract for North Sea Brent oil fell by 5.5% to $92.8 per barrel (the lowest since February 21). On the spot market, the price of Brent fell by 5.6%, to $94.85 per barrel, and the price of Russian Urals, the cost of which reached $67.4 per barrel, also decreased comparablely.
According to Sovcombank’s chief analyst Mikhail Vasiliev, weak statistics on China in July, which came out worse than expected, became a negative factor for oil and raw materials in general. The country’s industrial production growth slowed to 3.8% last month from 3.9% in June, while retail sales rose 2.7% year-on-year from the expected 5%, according to the State Bureau of Statistics of China.
Heightened fears about the outlook for the Chinese economy, coupled with recession risks in Europe, led to a strong rise in the US dollar in the global market.
During trading on Monday, the DXY index (the dollar against the six leading currencies) rose by 0.7% to 106.36 points. This determined the outstripping dynamics of the US currency.
Experts cite the admission of non-residents from friendly countries to trading in bonds as another factor of pressure on the ruble (see reference). Some local players could include in the dollar exchange rate OFZ sales by foreigners and the transfer of proceeds into foreign currency. However, the effect of such sales, according to the head of the analytical department of Zenit Bank Vladimir Evstifeev, was unjustifiably exaggerated, since the share of such investors in OFZs is traditionally low.
The low activity of non-residents is indirectly indicated by the low trading volumes of sovereign debt. According to Alexander Yermak, chief debt market analyst at BC Region, by 16:00 the volume of such transactions amounted to only 2.2 billion rubles, which is significantly lower than on Friday.
“It makes no sense for such non-residents to sell OFZs right now, since, unlike investors from unfriendly countries, they would have been issued anyway. Plus, ruble bonds remain attractive in light of the easing of the monetary policy of the Central Bank,” notes the manager of the Russian management company.
In the coming days, the dynamics of the ruble exchange rate will be determined by internal factors, in particular, the beginning of the tax period, which peaks on August 25. Vladimir Evstifeev estimates the volume of basic tax payments at 2.2 trillion rubles, which is 30% less than in July, but still a significant amount. “Tax payments can add $300-500 million to the overhang daily until they end on August 25,” notes Egor Zhilnikov, chief analyst at PSB, “The effect begins to be observed on the 18th-19th of each month.” According to him, by the end of the week the dollar will return to the range of 58-60 rubles/$.
OFZ traded unfriendly
The admission of non-residents from friendly countries to trading in bonds on the Moscow Exchange did not cause a significant market reaction, experts interviewed by Kommersant state. There was only little activity: quotes of one of the most liquid OFZ lost about 0.5 percentage points in the afternoon, but soon returned to their previous level, Georgy Vashchenko, deputy director of the analytical department of Freedom Finance Global, noted. The positive dynamics of OFZ yields was unidirectional over all terms, and the growth of the RGBI index (reflecting the dynamics of changes in the market price for a basket of OFZs with a fixed coupon) indicates an increase in investor interest in government securities, said Artem Autlev, an analyst on bonds of Ingosstrakh-Investments Management Company. Trading volume grew unevenly: the number of transactions with the most liquid OFZ increased by an average of 10-15%, and for some corporate bonds – by hundreds of percent, said Dmitry Lesnov, head of the Finam customer service development department. Another possible trace of the appearance of non-residents on the market today, according to Mr. Vashchenko, is the growth of the dollar against the ruble to a maximum since the beginning of the month.
To understand whether we will see a wave of bond sales from “friendly” non-residents, we will have to watch the auction for one or two weeks, says Vladimir Malinovsky, head of the debt market analysis department at Otkritie Investments. He believes that investors were technically unprepared for the opening of trading, “or they need more time to make a decision whether or not to close positions in Russian debt.”
However, the main reason for the lack of tangible influence of non-residents on the debt market, experts consider their extremely low share. Thus, according to Mr. Malinovsky, they account for 1-1.5% of the OFZ market and less than 1% in corporate loans. Investors from unfriendly jurisdictions have much more opportunities to “shake” the market, analysts warn: they account for about 15%, or about 2.4 trillion rubles.
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