The ruble refused to rise in price after the start of new rules for exporters

Economist Nikolaev: “The main driver of weakening has not gone away”

Throughout the first half of Monday, October 16, the ruble weakened moderately against major currencies. Although on this day the presidential decree on the mandatory repatriation and sale of foreign currency earnings by exporters came into force, the market openly ignored the event. The turning point did not take place: the further, towards evening, penny increase in the exchange rate dynamics of the ruble does not count. According to experts, it would be strange to expect a different reaction.

Almost the entire day, the dollar on the Moscow Exchange was around 97, the euro – 102.4. Thus, revenge on the part of the Russian currency did not take place, although there was a reason for this. Namely: as of Monday, a new regulatory norm came into effect, according to which exporters are required to credit at least 80% of foreign currency to their accounts in the Russian Federation. Moreover, before the expiration of two months from the date of receipt of funds under export contracts. And then they need to sell at least 90% of these amounts on the domestic market within two weeks.

“Such a solution will help equalize the balance between supply and demand and will help increase the predictability of trade, which is important for many Russian manufacturers who purchase components and other products and equipment abroad. And, of course, for our citizens who need high-quality and affordable goods,” Prime Minister Mikhail Mishustin said recently.

Observers agree: additional supply of currency on the market could bring from 5% to 10% strengthening of the ruble. The timing depends on whether the sale of proceeds will begin on October 16 or more than two months later (60 days for repatriation and two weeks for sale). Now it is clear that manufacturers operating in foreign markets are in no hurry.

“It’s hardly worth expecting a sharp turn today. New measures of currency regulation concern a limited range of companies, and not all exports, says BitRiver financial analyst Vladislav Antonov. “Therefore, the influx of currency into the market will increase extremely slowly.

Part of the foreign exchange earnings will be used to service external debt and imports. In addition, a high level of geopolitical uncertainty remains. In the absence of external shocks, you can count on the ruble strengthening to 90 per dollar by mid-November. Now the main task facing the government is to prevent an uncontrolled weakening of the ruble.”

The ruble exchange rate is always adjusted with a slight lag after important events for the market, reminds the head of the analytical department of AMarkets Artem Deev. Thus, it usually reacts to changes in the Central Bank’s key rate with a delay of two to three days. Now business is in a state of anticipation: oil is growing slowly, stock indices are fluctuating in different directions, the decree on the repatriation of foreign currency earnings requires a detailed analysis and adjustment to it, which is what companies are now doing. And if the ruble strengthens in the coming days, it will be only slightly.

Technical issues with receipts in non-convertible currencies (for example, Indian rupees) have also not been resolved, which means that the effect of the new obligations of exporters will still be incomplete.

“It was difficult to expect any significant changes in one day: the decree states that at least 90% of the proceeds received in accounts must be sold by exporters on the domestic market within two weeks,” says Alexey Vedev, director of the Center for Structural Research at RANEPA. – Accordingly, companies have time to maneuver. Without a doubt, the measure will affect the exchange rate, but not immediately. Secondly, there may be seasonal fluctuations when the sale of proceeds will be imposed on tax payments, which are usually made by the business at the beginning of each new quarter.”

Market players have already reacted to the decree – the moment they learned about it. The effect took place a few days ago, short-term and largely psychological: the ruble exchange rate rose by several units, and then returned to its usual trajectory, says Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences. After reviewing the contents of the document and comparing its requirements with current realities, the market managed to draw disappointing conclusions. The main thing is that today exporters already sell at least 80-85% of foreign currency earnings in Russia, and the decree sets the figure at 90%. This means that even if sales grow, it will only be by a few percentage points, the expert believes.

“At the same time, export dynamics in value terms are not improving,” Nikolaev sums up. – According to the forecast presented along with the draft budget for the next three years, in 2023 export volumes will decrease by 22% compared to 2022. Moreover, this is still an optimistic assessment, since we ended August with an indicator of minus 29%. Thus, the fundamental driver of the weakening of the ruble has not gone away.”