The dollar reached a hundred: the ruble was predicted to weaken irreversibly

Analyst Drozdov: “The situation with the exchange rate suits everyone”

Two psychological levels at once – 100 rubles per dollar and 105 per euro – were exceeded at the auction on Thursday, October 5. The event is not expected to cause a sensation, as it has been expected for a long time. That said, this kind of thing doesn’t happen every day and definitely deserves some analysis.

Experts associate the next round of ruble weakening with a combination of factors – firstly, with the end of the tax period, secondly, with a decrease in sales of foreign currency earnings by exporters, thirdly, with an insufficient influx of foreign currency against the backdrop of increased demand for it, fourthly , with the strengthening of the dollar in the global market, fifthly, with the correction of oil exchange prices. At the same time, there is no concern from the authorities yet.

Meanwhile, since the beginning of 2023, the position of the ruble against the dollar has weakened by 40%, despite the Central Bank’s attempts to support the Russian currency by increasing the key rate and limiting lending. In addition, according to InvestFuture analysts, the hope for another regulatory measure did not materialize: the ban on the export of petroleum products not only did not bring down prices in the country, but also hit its foreign exchange earnings.

“Oil is gradually becoming cheaper on the stock exchange – today the Brent brand is trading at $85.03 per barrel,” states Artem Deev, head of the analytical department at AMarkets. – But it was oil and gas revenues that provided significant support to the ruble exchange rate, for which, moreover, the favorable tax period had ended. Having lost support from the conversion of foreign currency earnings by exporters to cover local obligations, the Russian currency again showed a downward trend. I believe that by the end of the year it will lose up to 2 rubles per month against the dollar and euro.”

From a minimum of 50 units, the ruble has been weakening for 325 trading days (464 calendar days), by an average of 16 kopecks daily, says BitRiver financial analyst Vladislav Antonov. At the same time, a high level of geopolitical risks and other unfavorable (and difficult to predict) factors, such as the imbalance of supply and demand in the domestic foreign exchange market, remains high. The West is introducing more and more sanctions against Russia, blocking cash flows from exports. Oil prices could not stay above $90 per barrel.

“It seems that the situation with the ruble suits everyone: there is a certain consensus between departments regarding the lower and upper limits of the exchange rate allowed by the state – 92.5 and 102 per dollar,” says financial analyst Sergei Drozdov. – Dmitry Peskov’s recent words can be considered confirmation of this. As the Kremlin spokesman said, the exchange rate is not a cause for concern, since the Central Bank and the Ministry of Finance fully ensure macroeconomic stability. Accordingly, for some time we will live in exactly this reality, beneficial for the budget, which needs money.”

Meanwhile, globally, the ruble is clearly not in the first position in terms of weakening. In the latest ranking of the worst-performing currencies over the year, it was in “honorable” seventh place, having lost 63% of its previous value against the US dollar. Far ahead are the Lebanese pound (hyperdevaluation by 896%), the Zimbabwean dollar (+886%), the Venezuelan bolivar (+427%) and the Syrian pound (+418). The results are noticeably more modest for the Argentine peso (+114%) and the Angolan kwanza (+98%). The list is completed by the Surinamese dollar (+57), Turkish lira (+51%), Pakistani rupee (+31%) and Laotian kip (+27%).