The ruble weakens due to falling oil prices
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The exchange rate of the dollar for the first time since April 2022 ended trading above 82.5 rubles / $. The weakening of the Russian currency is taking place against the backdrop of falling oil prices due to recession in several European countries. At the same time, the weak supply of foreign currency from exporters and the continued demand from the population and foreign companies cause an accelerated growth in dollar quotes. Market participants expect a partial recovery of the ruble towards the end of the month against the background of more active sales of foreign currency by exporters.
The dollar exchange rate at the auctions of the Moscow Exchange on May 8 confidently overcame the level of 82 rubles/$ and reached 82.78 rubles/$. This year, the rate was higher only on May 7. At the same time, at the close of trading, the dollar exchange rate stopped at 82.6 rubles / $ – the maximum closing value since April 5, 2022. During the day, the American currency has risen in price by almost 62 kopecks. The euro exchange rate rose by 1.45 rubles per day, to the level of 89.1 rubles / €, having updated the maximum since April 28. The exchange rate of the Chinese currency added 12 kopecks per day. and rose to 11.6 rubles / CNY, also the highest since the end of April.
The rise in the rates of unfriendly currencies took place at a low activity of investors. The volume of trading in dollars with delivery “tomorrow” amounted to less than 60 billion rubles, which is a quarter less than the average for the previous week. Euro trading volumes did not reach 27 billion rubles. At the same time, the trading volume of the yuan amounted to almost 100 billion rubles, which is 16% higher than the average value of the previous week.
The ruble weakens amid falling oil prices. North Sea Brent fell more than 4% on the spot market on Thursday to $73.74 a barrel, according to Investing.com.
Thus, oil quotes are near annual lows, despite the announcement of another reduction in oil production by OPEC+ countries. “Commodity prices are under pressure from the risks of a global recession. On Thursday, it became known that the eurozone economy fell into recession after the German economy,” said Mikhail Vasiliev, chief analyst at Sovcombank.
Due to the relatively low oil prices that have been on the market since mid-April, the volume of export earnings is not enough to comfortably satisfy the recovered imports, which raises foreign currency quotes, Dmitry Babin, an expert on the stock market at BCS Mir Investments, notes.
Anton Siluanov, Minister of Finance, at a meeting of the President of the Russian Federation with government members on May 17, 2023:
“Problems with oil and gas revenues. So far, we see that, taking into account the market situation, taking into account all these discounts, they are lagging behind the plan.”
The outflow of capital from the country is facilitated by private investors preparing for the holiday season, as well as foreign companies leaving the country. “It is possible that some other foreign company plans to leave Russia and buy foreign currency as long as the recently established limit of $1 billion per month allows it,” says Daniil Bolotskikh, an analyst at Tsifra Broker.
Due to the predominance of demand for foreign currency over supply, the growth of rates will continue. Dmitry Babin does not rule out that in the coming sessions, due to the lack of sales of foreign currency by exporters, the dollar may test the strength of the level of 83.5 rubles/$. At the same time, the upcoming meeting of the Bank of Russia on the key rate will not have a significant impact on the exchange rate, since most analysts expect the rate to remain at 7.5%.
The strengthening of the ruble, Mr. Vasilyev believes, is possible in the last week of June, when exporters will sell foreign exchange earnings to pay taxes. Then, in his opinion, the return of the dollar exchange rate to the lower border of the ranges of 80–85 rubles/$ is possible.
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