The “red line” has been named, below which the ruble will not be allowed to fall

Last week certainly disappointed optimists who expected the ruble to continue strengthening in December. Instead, our national currency switched to its usual weakening course, losing ground from 89 to 92 per dollar. And by the end of the week the euro even looked beyond the 100 ruble mark. Where will the ruble go next? We asked experts about this. MK’s questions were answered by: BitRiver financial analyst Vladislav Antonov, Capital Skills Financial Academy analyst Mark Goikhman, financial analyst, author of the Economism project Alexey Krichevsky, Freedom Finance Global leading analyst Natalya Milchakova.

– Should we expect further weakening of the ruble against the dollar and euro in the coming days? Why and to what level?

Krichevsky: It’s worth it, but this process is unlikely to take long. There is a serious demand for foreign currency from importers who did not have time to purchase at 88-89 rubles per dollar, so they are now forced to buy at a higher price. The dollar will not go above 94 rubles – the regulator will not allow it, and besides, with almost 100 percent probability, we will face another round of raising the key rate of the Central Bank on December 15. The possible maximum for the euro is 102-103 rubles.

Goikhman: The drivers for the impact on the ruble in December are contradictory. “Disadvantages” for the ruble are the rise in inflation in November to 7.5% from 6.7%, according to Rosstat, an increase in demand for currency before the New Year for imports and purchases by the population and non-resident companies, budget expenses in rubles, cheaper oil from end of November from $84 to $75 per barrel of Brent. But the paradox is that such “cons” can turn into “pros”. The surge in inflation will likely prompt the Central Bank to raise the key target on December 15 from 15% to 16%. The rise in demand for currency is accompanied by an increase in its supply. Large exporters are increasing the sale of foreign currency earnings – up to $13.9 billion in November from $12.5 billion in October, according to the Central Bank. Moreover, in the second half of the month, sales are likely to increase due to tax payments. An excessively sharp decline in oil prices can also cause their subsequent growth, favorable for the Russian currency.

The combination of these circumstances is unlikely to allow the currencies to significantly strengthen against the ruble. If there are no unexpected force majeure events, the dollar will not rise above 93-94 rubles, and the euro – 102-103 rubles.

Antonov: The strengthening of the dollar on the global foreign exchange market and a noticeable decline in oil prices put some pressure on the ruble. Over the past two weeks, the ruble has seriously lost its accumulated gains. The coming week is very exciting: at the meeting of the Central Bank of the Russian Federation on December 15, it is likely that they will announce an increase in the key rate by 1%. Positive data on budget execution, Russian economic growth and other macroeconomic indicators are not yet enough for the ruble to continue its recovery.

– In the event of further weakening of the ruble, can we expect the financial authorities to intervene in the situation on the foreign exchange market? At what level of course can it follow and what exactly instruments of containment still remain at the disposal of the Central Bank and the government?

Milchakova: The recent weakening of the ruble was associated, in our opinion, with an overly nervous reaction of the foreign exchange market to the fall in world oil prices below $80 per barrel, but now this negative has most likely been played back by the market. It appears that additional measures to regulate the foreign exchange market are not necessary, otherwise unnecessary restrictions, as the head of the Central Bank Elvira Nabiullina said, will create additional costs for business. The intervention of the authorities will only consist of the fact that the Central Bank of the Russian Federation will continue its tight monetary policy, and restrictive measures for the growth of foreign exchange rates in the form of the mandatory sale of foreign currency earnings are already in effect.

If, for example, due to some external reasons, the dollar soars to 100 rubles or higher, government intervention is possible, but, most likely, it will not be about introducing any additional restrictions on the foreign exchange market, but about “adjustment” of existing ones. For example, the Central Bank of the Russian Federation can immediately increase the key rate to 20% per annum. But we do not expect “black swans” in the foreign exchange market until the end of this year, nor do we expect too much strengthening of the ruble against the backdrop of falling oil prices.

Goikhman: If, contrary to expectations, the fall of the ruble is significantly stronger, the economic authorities may counter this by the end of the month. The “red line” – the rate below which the ruble will not be allowed to fall – was so far informally designated in the summer and autumn. This is the sacramental threshold of 100 rubles per dollar, exceeding which caused a sharp reaction from the authorities. The arsenal of influence includes, in particular, a further rise in the key rate, “verbal interventions” on the part of senior officials, and possible temporary administrative restrictions on the purchase and withdrawal of currency.

Antonov: Thanks to the presidential decree on the sale of foreign currency earnings by exporters and the increase in the key rate of the Central Bank, the trading corridor within the range of 87.66 – 102.35 rubles is still relevant for the dollar. It is likely that the price of the US currency will remain in this range until the end of the first quarter of next year. By the end of this year, the euro may again reach the maximum level of 103 rubles for this currency pair.

Krichevsky: The Central Bank’s tools today are simple. Either force the exchange rate into a “social” framework using robot traders, or ask exporters to sell proceeds more actively and stretch out these sales over time. Accordingly, using such simple methods, together, of course, with an increase in the rate, the regulator will keep the exchange rate in the corridor of 90-94 rubles at least until the end of the year.

– How do you think the ruble exchange rate will change by the end of this year?

Goikhman: It is most likely that the rate will move within a small range, since the factors influencing the rate that I mentioned earlier largely compensate for each other. The current corridor for December is 88-93 rubles per dollar and 96-101 per euro.

Antonov: It is premature to talk about the strengthening of the Russian currency until the end of December. Today, scenarios are being effectively implemented that restrain a noticeable weakening of the Russian currency through the ongoing cycle of raising the key rate and the mandatory sale of foreign currency by exporters. It is psychologically important for market participants and the population that the dollar and euro exchange rates at the end of the year are below the 100 ruble mark. Although let me remind you that they started this year at the levels of 69 rubles and 76 rubles, respectively.

Milchakova: We believe that in the coming days the dollar and the euro may fall in price against the ruble. It is highly likely that the US Federal Reserve and the ECB will decide to keep interest rates at current levels, which could cause the dollar and euro to weaken against the ruble. In turn, the Central Bank of the Russian Federation will probably increase the key rate – the only question is by how much. Thus, the ruble has a chance to grow. According to our forecast, until the end of December the dollar may fluctuate within the range of 88-93 rubles, the euro – within the range of 95-99 rubles.