The main threats to the ruble after the elections are named: uncertainty for the Russian economy

The Russian national currency has come close to a certain conditional line, beyond which, judging by conversations on social networks, and sometimes according to expert forecasts, it will almost collapse to 120 per dollar. However, since these sentiments are mainly associated with the presidential elections, they are more likely from the field of psychology than have a real macroeconomic basis. The truth is that the ruble has much more risks ahead than support factors.

On Thursday, March 14, the dollar began trading on the Moscow Exchange with growth, reaching the level of 91.64 rubles (+14.5 kopecks to the previous closing level). The weighted average exchange rate of the euro with settlement due tomorrow was 100.34 (+18.1 kopecks).

Actually, there are three events coming up that will, to one degree or another, link the future fate of the Russian currency. The first is the elections: on social networks there is an opinion that after March 18, the authorities will “let the ruble take its course,” and it will again break the 100 mark to the dollar. The second is a meeting of the Board of Directors of the Central Bank on the key rate on March 22. Third, the end of the presidential decree on the mandatory sale of foreign currency earnings by exporters in late April.

However, there is one fundamental macroeconomic circumstance against which these three administrative factors clearly pale in comparison. The Central Bank revised the estimate of the trade balance surplus of the Russian Federation, reducing it from $9.7 billion to $7.8 billion. The reason was a decrease in exports from $29.8 billion to $28.9 billion and an increase in imports from $20.1 billion to $21.0 billion. What , coupled with sanctions, geopolitical turbulence and the need for Russia to comply with agreements with OPEC+ to limit oil production, will certainly contribute to the devaluation of the ruble. Plus, given the budget deficit, the authorities will have to find money somewhere to implement the large-scale programs outlined by Putin in his address to the Federal Assembly.

“It is unlikely that after the elections the exchange rate will collapse, especially to 120 per dollar – this requires a powerful geopolitical shake-up. “Pyish talk,” as Ivan Bunsha would say, the central character of the film “Ivan Vasilyevich is changing his profession,” says financial analyst Sergei Drozdov. – At the same time, all hopes for the ruble at 80-85 were dashed by harsh reality. The grandiose plans announced by the president will require a lot of expenses. And the Ministry of Finance is accustomed to solving any budget problems by weakening the national currency. Now they will try to keep the rate at least at current levels – in the range from 90 to 93.5.”

As for the key rate of the Central Bank, it has almost no effect on the market situation – neither in Russia nor in most other countries. A clear example is Turkey: with the current rate of over 40%, the lira remains extremely weak, notes Drozdov. In developing economies, the exchange rate is determined primarily by export earnings, the volume of its sales in the domestic market, and the relationship between supply and demand. If your export income grows, covering domestic demand, then the national currency is strong and stable.

“Further developments partly depend on whether the decree on the mandatory sale of foreign currency earnings by exporters will be extended,” says Alexander Razuvaev, a member of the supervisory board of the Guild of Financial Analysts and Risk Managers. – As you know, the Central Bank is against it, but the Ministry of Finance and the government as a whole are for it. If they do not extend it, this will result in a temporary weakening of the ruble within 5-7%. A collapse is possible only in the event of a sharp aggravation of the geopolitical situation, but there are no prerequisites for this yet. But in general, the exchange rate is a derivative of the trade balance, that’s what you need to keep an eye on.”

The ruble exchange rate has fluctuated noticeably recently due to general uncertainty in the global market. Together with it, Western currencies also had to undergo a strength test – and they did it not without difficulty, notes Valery Tumin, director of markets for Russia and the CIS at fam Properties. In his opinion, the Bank of Russia at the next meeting will once again keep the rate at the same level of 16% per annum. An easing of monetary policy (MP) should be expected no earlier than the second half of April. And taking into account that the average annual inflation rate will be close to 6.9–7%, the dollar and euro may strengthen in the second half of April, not earlier.

“As for the decree on the mandatory sale of foreign currency earnings, I do not yet undertake to predict whether this measure will be extended,” says Tumin. – Initially, it was adopted to fend off threats to the ruble in conditions of a shortage of foreign currency supply in the domestic market. Which, in turn, was the key to keeping the exchange rate within acceptable limits for the government. But when the Central Bank moves to soften monetary policy, the need for this will no longer exist.”

According to economist, BitRiver Communications Director Andrei Loboda, the ruble is now throwing in different directions, and this week the dollar exchange rate may fluctuate between 91-92.5. Increased volatility will be facilitated by fresh data on the acceleration of annual inflation in the Russian Federation in February to 7.7%. After the announcement of the election results and until the end of March, the “American” may show dynamics in the range of 89-93 rubles, almost at current levels. The formation of a new government will take time, and this will bring some uncertainty for the Russian economy. And if the authorities do not extend the decree on the mandatory sale of foreign currency earnings by exporters, the dollar could rise to 95-97 rubles.