The factors for strengthening the Russian currency are named: expensive oil, tax period, high rate

Analyst Razuvaev: “By the end of the year, the dollar may well reach the level of 80 rubles”

The Central Bank’s decision to immediately raise the key rate from 13% to 15% came as a shock to most analysts, who had expected an increase to a maximum of 14%. This move by the regulator will make already expensive consumer loans even more inaccessible, but the ruble reacted ambiguously to it. At first, the American and European currencies began to fall in price, but by the end of the trading day on Friday they tried to win back their positions and ended the trading day at about 94 rubles per dollar and 99.6 rubles per euro. Experts told MK what will happen to the ruble at the beginning of November and how the decision of the Bank of Russia will affect it by the end of the year.

Over the past week, the ruble has strengthened by almost 3% against the dollar and euro. Its intensification was caused by three factors. Firstly, the tax period has begun, which always plays into the hands of the domestic currency. It will end on October 30, but until then its impact on the ruble exchange rate will be positive. Secondly, the domestic currency continues to feel the impact of the decree of the Russian President on the mandatory sale of foreign currency earnings by exporting companies. The third factor inspiring the strengthening of the ruble was the increase in the key rate of the Bank of Russia above market expectations – by 2%.

In this regard, the forecasts of economic experts were also filled with positivity. Some predict the strengthening of the ruble to levels around 90 rubles per dollar, while others believe in the readiness of the domestic currency to win back positions from the dollar much more actively. For example, according to BitRiver financial analyst Vladislav Antonov, the strengthening of the ruble, which began some time ago, received significant support from the Bank of Russia and will continue next week. The influence of the tax period, on the contrary, will cease, but the impact of the decree of the President of the Russian Federation on the sale of foreign currency earnings will be reflected in the ruble exchange rate for another six months. After the decision of the Central Bank, the likelihood of the dollar falling to 92-93 rubles, and the euro to 98-99 rubles in the coming days, has sharply increased, the expert noted.

In general, the impact of the key rate on the ruble has become longer and more indirect due to the departure of non-residents, Western sanctions and restrictions on capital movements. This opinion is shared by the chief analyst of Sovcombank, Mikhail Vasiliev. According to him, the decision of the Central Bank of the Russian Federation will have a moderately positive impact on the ruble in the coming days. “An increase in the key rate will lead to an increase in the cost of loans, which will reduce consumer and investment demand, including the demand for imports, and will also reduce the demand for currency,” explains the expert. “In addition, increasing deposit rates and bond yields will increase the attractiveness of ruble savings and increase demand for rubles.” The analyst expects that the dollar will trade in the range of 94-98 rubles by the end of the year, and the euro will be in the range of 99-104 rubles.

At the same time, the most radical analysts argue that we can expect a more serious impact of the key rate on the ruble. In particular, Artem Tuzov, director of the corporate finance department of IVA Partners, believes that raising the rate to 15% became a stern signal for the market and all financial and industrial corporations. The time has come for them to reduce investments and reduce credit lines. “We can expect a fall in GDP,” the analyst warned. “As a result, demand for imports will also decrease, which will lead to a strengthening of the Russian currency, possibly to 75-80 rubles per dollar by the end of the year.”

In discussing the possibility of the ruble strengthening beyond expectations, the most optimistic financiers do not forget about the situation on the oil market. Thus, Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers, expressed confidence that by the end of the year the dollar can fall in price to 85 rubles, but the main influence on this will be the sale of exporters’ proceeds and rising oil prices, although the key rate will also play a role. And by the spring of 2024, the dollar may well reach the level of 80 rubles, provided that the restrictions prescribed by presidential decree are maintained and there is a sufficient influx of currency into the country, which is always facilitated by rising oil prices, the expert noted.