The factors that allowed the ruble to strengthen are named: it’s too early to rejoice

Professor Zubets: “In mid-2024, the dollar could cost 110 rubles”

This week on the foreign exchange market is marked by the long-awaited strengthening of the ruble. On Monday, the dollar was trading on the Moscow Exchange at the level of 95 rubles, on Tuesday it was already below 94. During this time, the euro planned from 102 to 99 rubles. Financial experts interviewed by MK consider the current strengthening of the ruble’s position to be logical and justified – especially in light of the meeting of the Central Bank’s board of directors scheduled for Friday, October 27, where the key rate is likely to be raised even higher. But will the Russian national currency have enough safety margin for long, or will it quickly move on to its usual trajectory of decline?

Let us remind you that in early October the dollar exchange rate came close to the three-digit mark – 100 rubles. This was followed by a presidential decree on the mandatory repatriation and sale of foreign currency earnings by a number of exporting companies. This strengthened the ruble somewhat – up to 97 kopecks per dollar. And after hanging at this level for a week, our national currency moved to a more noticeable stage of strengthening, winning back one ruble from the dollar day after day.

Financial experts interviewed by MK identify three main reasons for the metamorphosis that has occurred with the ruble. Firstly, he was supported by world oil prices, which have recently remained confidently above $90 per barrel and, according to many forecasts, will soon rise to $100. Secondly, the effect of the authorities’ decision on the mandatory sale of foreign currency earnings is beginning to show: it gradually began to flow to the stock exchange. Finally, thirdly, the date of the next meeting of the Central Bank’s meeting on the key rate (October 27), at which market participants expect this indicator to rise from 13% to 14%, is getting closer. As you know, the higher the rate, the greater the support for the ruble.

Based on the combination of these factors, many analysts predict further strengthening of the ruble in the near future. Some believe that the rate will reach 92 – 92.5 per dollar; some predict 90; and some are even inclined to believe that the ruble will reach 80-85 per dollar. By the way, it is appropriate to recall that the Ministry of Economic Development in its macro forecast predicts that by the end of this year the “American” will trade at the level of 90 rubles.

“What happened to the ruble was exactly what the markets were waiting for, after exporters were obliged from October 16 to credit at least 80% of foreign currency earnings to Russian accounts, and then sell at least 90% of these funds on the domestic market,” explains financial analyst Sergei Drozdov. – And now, apparently, the rate has begun to move towards the border of 92.5-93 rubles. Probably, in the next day or two this mark will be reached, and then even brighter prospects will open up for the ruble – a chance to reach 87 per dollar. And if the Central Bank raises the rate, as everything points to, this could support the ruble even more.”

“I believe that our national currency will strengthen until the spring of next year,” believes Alexei Zubets, a professor at the Financial University under the Government of the Russian Federation, “That is, until the election of the President of the Russian Federation and the abolition of the mandatory sale of foreign currency earnings. After which the ruble will begin to depreciate again. It is possible that by mid-2024 we will see the dollar at 110 rubles.”

The chief researcher at the Institute of Economics of the Russian Academy of Sciences, Igor Nikolaev, devotes a much shorter period to the strong ruble. According to him, now our national currency is becoming more expensive due to two factors: the presidential decree on the mandatory sale of foreign currency earnings by exporters, and the approaching tax period, when companies sell foreign currency in order to have rubles for settlements with the tax service. “In my opinion, this is a short-term movement of the ruble towards strengthening, the inertia of which will most likely continue until the end of this month. And by the November holidays, it is possible that a reverse movement will begin, the ruble will begin to sink,” the scientist predicts.

Financial analyst, Candidate of Economic Sciences Mikhail Belyaev is even more skeptical about the prospects for the ruble, who believes that there has been no turning point in the race with world currencies. “We do not see a strengthening of the ruble exchange rate, but a slight correction. The fact that in the last 2-3 days our ruble has slightly strengthened its position, from the point of view of the theory of exchange rate formation, does not mean anything.”

According to Belyaev, the course correction is inertial in nature, and may continue for several more days. However, he does not see a long-term strengthening trend. “After all, the main reasons for the weakening of the national currency remain. They depend on the state of our economy – and it is on pause. If it has been growing slightly in recent months, it is only thanks to the military-industrial complex. And as long as the economy is weak, its currency cannot be strong.”