The ruble went into pre-New Year’s fall

Economists gave forecasts for the exchange rate

The day before, during exchange trading, the ruble noticeably weakened against the euro. Then the dollar and the yuan strengthened against the ruble. Some analysts attribute this to the worsening international situation, pointing to the G20 summit, the UN anti-Russian decision on reparations to Ukraine and the events in Poland. Others recall that late autumn and winter are traditionally bad times for the domestic currency: this pattern has been observed for more than 20 years and is associated with the seasonality of oil prices. But this year it’s different.

The expected weakening of the ruble may turn into a pre-New Year “swing”: the exchange rate will fluctuate up and down, reacting to the embargo on oil exports from the Russian Federation, the decision of the Central Bank on the key rate and the results of the OPEC + meeting.

Is the weakening of the current ruble a momentary factor or is it the beginning of a new trend for the national currency to fall? experts say. The exchange rate of the national currency can be an unpleasant surprise, primarily due to the aggravation of the foreign policy background.

As Dmitry Aleksandrov, Head of the Analytical Research Department at IVA Partners Investment Company, Dmitry Aleksandrov, pointed out, the most negative scenario for the ruble is the Ukrainian conflict spreading to the continental level, which will be accompanied by a drop in foreign exchange earnings due to very likely new trade sanctions (although not complete) with Western counterparties and the corresponding rate movement.

However, one must understand that landslide changes are now hardly possible due to the lack of foreign players and restrictions in maintaining positions in the euro and the dollar, the expert noted.

Because of the sanctions, Russia’s GDP is shrinking, and the situation will worsen in the future. At the end of 2022, this indicator will decrease by 3-3.5%. No one is going to lift sanctions in the near future. Although our country is adapting to the negative, exceeding expectations, it will not work to quickly build new pipelines to reorient raw material imports.

“A lot of money and human resources are being taken away by the current geo-economic aggravation between Russia and Western countries,” confirms BitRiver financial analyst Vladislav Antonov. – If the West continues to impose sanctions against Russia, then the economic situation will clearly not benefit from this.

Even with the development of the worst scenario of an aggravation of the geopolitical conflict with the West, the ruble can be stable, since the funds of non-residents are frozen, and the Russians do not need the currency in large volumes.

In the absence of buyers, sellers will push down the dollar and euro rates, as happened in March under the currency restrictions of the Central Bank. The key events that may have an impact on the market before the end of the year are the OPEC + meeting, the decision of the US Federal Reserve and the Bank of Russia on key rates, the expert believes.

Now the situation on the market is in favor of the ruble due to the low outflow of currency from the country. But, according to Valery Emelyanov, an expert on the stock market at BCS World of Investments, this is not a trend, but a coincidence: the dollar is artificially “pressed” against the ruble and is waiting to rise at any moment. Until the end of the year, the probability of seeing the dollar and the euro at 65 rubles and above remains high. The main reason for this is the sanctions and the expected drop in exports.

“If the dollar is at 65 rubles, then the euro and yuan will respectively rise to 67.8 and 9.2 rubles,” the expert predicts. But with the emergence of new factors (for example, a decrease in oil prices), the dollar and the euro may well break through the level of 70-73 rubles, and the yuan will cost about 10 rubles.

Since the beginning of December, an embargo has been introduced on the export of Russian oil to the EU, which can significantly reduce the inflow of foreign currency. “On the other hand, before the New Year, import purchases traditionally increase, that is, there will be demand for foreign currency, so we should assume a gradual weakening of the ruble in the next month and a half,” Mark Goykhman, chief analyst at TeleTrade, continues the conversation. “If the geopolitical situation does not change, then the exchange rate may reach 65-70 rubles per dollar and euro and 9 rubles per yuan.” This is the most likely scenario.

In the event of a sharp aggravation of the situation in the special operation zone, a more serious depreciation of the national currency is possible. Its size will be determined by specific circumstances: the rate can reach 75-80 rubles per dollar and 10 rubles per yuan. In the medium term, an increase in the devaluation of the ruble in 2023 is most likely due to a gradual relative decrease in export earnings, an increase in the budget deficit and money supply, and economic contraction, the expert emphasized.