The fall of the ruble no longer worries the Russian authorities

Nobody in power is likely to worry about the weakening of the ruble anymore, since on Friday morning the rate broke through the mark of almost 101.5 rubles per dollar. The last time the ruble was seen this weak was in August. True, by the end of the session the dollar lost its position slightly. Apparently, the actions (or rather, inaction) of the authorities in the foreign exchange market are described by the paradigm of the head of the Central Bank of the Russian Federation, Nabiullina, who constantly emphasizes that it is the free foreign exchange market that is a blessing and insurance against external shocks.

“The dollar has reached the interim estimated target level of 101.5 rubles: the conditions for a downward correction have been met, but in general, dollar purchases prevail over sales,” says BitRiver financial analyst Vladislav Antonov. “This indicates the possibility of further weakening of the ruble to levels of 104-105 rubles.” The euro exchange rate set a weekly maximum at 106.91 rubles. On the horizon, buyers now have 109 rubles in euros, the expert is sure.

In general, the attitude towards the weak ruble exchange rate among the “powers that be,” judging by their statements, has changed a lot in recent weeks. If in mid-September Putin, at a meeting on the draft federal budget for 2024–2026, instructed the government and the Central Bank to take measures to strengthen the national currency, then judging by the president’s statements made the day before at a meeting of the Valdai Club, priorities have changed.

In particular, Vladimir Putin, although he called the weakening of the ruble a problem, also highly praised the economy’s resistance to Western sanctions. In addition, the head of state praised the Cabinet of Ministers and the Bank of Russia for stabilizing the situation on the foreign exchange market, without wanting to focus on the fact that the order he himself issued to strengthen the ruble was clearly not implemented.

“Yes, we have problems,” Putin admitted. – We see them: non-return of revenue, weakening of the national currency – we see it. Both the Central Bank and the government are reacting to this. I am confident that the steps are correct and the results will be good.”

Dmitry Peskov even stated that there is no reason to worry and, in general, it is time for Russians to stop monitoring the exchange rate of the American currency so closely.

Under the current conditions, the Ministry of Finance does not need to make a statement: this department is doing well, because state treasury revenues are growing due to an increase in the ruble value of oil exports. The problem with the budget deficit, which arose at the beginning of the year, is being resolved quickly and without unnecessary strain, searching for difficult ways and unpopular solutions in the form of increasing taxes.

True, the fall in the ruble exchange rate to three-digit values ​​in August led to the Central Bank urgently raising the key rate by 3.5% to 12%, and the authorities discussed the re-introduction of control measures to support the currency, but things did not go beyond words. In September, the rate was raised again – already as planned and by only 1%. In October, the decision on the key rate will be made on the 27th and analysts are expecting its next increase, so in this regard, the regulator’s strategy remains the same.

According to the associate professor of the department of global financial markets and fintech of the Russian Economic University. Plekhanov Denis Perepelitsa, the ruble is in line with a gradual devaluation, as the Bank of Russia and the Ministry of Finance continue a fairly soft monetary policy. There are no additional restrictions on capital withdrawal. There is also no mandatory sale of foreign currency earnings yet.

The current increase in the exchange rate is associated with the growth of the US dollar index – it has risen in price against all major currencies. The Russian budget for 2024 was adopted at the rate of 92 rubles per US dollar. Thus, it is not profitable for the Ministry of Finance to lower the ruble below this threshold in order to overcome the budget deficit. “Measures are being taken to strengthen the ruble, but they are more decorative, such as raising the rate to 13%,” the expert believes. “Most likely, the key rate will be raised further, to 14% by the end of 2023.”

The weakening of the domestic currency that occurred on Thursday and Friday is also associated with the price of Brent oil – this is the world standard for Russia’s main export. “In our opinion, the fall of the ruble on Thursday, October 5, was associated with the collapse of the Brent price that occurred on Wednesday by 5.6%, despite the fact that for the whole of September Brent oil rose in price by 7.6%,” says a leading analyst at Freedom Finance Global Natalya Milchakova. “In addition, the long holidays in China play a big role in the weakening of the ruble this week, when payments in yuan are not carried out, and, accordingly, the demand for the dollar increases.” Finally, the factor of the beginning of the month also makes its contribution, when the previous tax period, during which the demand for currency falls, is completed, and the new one has not yet begun.

On Monday, October 9, most likely, the dollar will fluctuate in the range of 99-101 rubles, that is, a sharp collapse of the ruble is unlikely. In order for the dollar to reach 105 rubles, it must first consolidate above 102 rubles, but so far it has not been very successful: the assault on the 101 ruble mark looks somewhat sluggish.

Further, over the next week, the dollar may fall to 97.5-98 rubles, as China returns from the holidays, and Chinese banks will again begin making payments in yuan, and the price of oil will gradually stabilize after the collapse in the corridor of $84-86 per barrel, she predicted expert.

Read the material “Minister Reshetnikov made it clear: the ruble exchange rate is none of our business”