The ruble will continue to collapse: four analysts gave sad forecasts

– What provoked the April collapse of the ruble?

Alexander Bakhtin, investment strategist at BCS World of Investments: “The ruble is declining for several reasons, the most important of which are a sharp increase in budget spending caused by geopolitical necessity and a worsening situation with the balance of payments.

The latter is associated with a decrease in the volume of foreign exchange export earnings entering the country due to sanctions, a forced discount on raw materials supplied abroad, as well as a voluntary reduction in oil production by Russia. At the same time, the demand for foreign currency from importers continues to increase: after all, imports to our country have almost recovered to the levels of 2020-2021.

Fears of an increase in capital outflow due to the departure of Western companies could also increase the pressure on the ruble. In particular, the other day there were reports that Shell could withdraw about 95 billion rubles from Russia after withdrawing from the Sakhalin-2 project.

Alexey Fedorov, TeleTrade analyst: “The main reason for the 8% depreciation of the ruble this week seems to be the FX market’s reversal of the decline in energy prices in March, when oil prices fell by 17% to $70 per barrel of Brent. Approximately the same thing could be observed at the end of 2022, when, due to the isolation of the Russian financial market from external markets, oil prices fell by more than 20% in November, and the ruble depreciated by 17% only in December.

In addition, the market is currently discussing a lot about the contribution to the weakening of the exchange rate of Shell’s payment of 95 billion rubles for a share in the Sakhalin-2 project. This is indeed quite a large amount for the Russian foreign exchange market, but naturally it could not weaken the ruble by 8% at once – that is, it is not the main one. but an additional factor.

Fedor Sidorov, private investor, founder of the School of Practical Investing: “The ruble began to weaken at the end of March, when data on the budget deficit began to appear (about 3 trillion rubles, which was a record for the first quarter).

Also influenced by data on the failure of exports: although world oil prices are growing, supplies of raw materials from Russia are carried out at an average price of Russian oil of $48-49 (taking into account the discount). This was the main factor for the ruble to decline and the dollar and euro to rise.

But this week, the main event for the foreign exchange market is a record capital outflow due to the departure of Western investors (in total, as a result of transactions for the sale of their shares, foreigners will withdraw up to $20 billion in 2023). This will lead to the fact that the ruble will fall further.”

Ivan Samoylenko, managing partner of B&C Agency: “Now the ruble is under pressure from the decline in our country’s export earnings: according to the Ministry of Finance, only oil and gas revenues have decreased by almost 50% since the beginning of the year. And the demand for foreign currency is growing, as it is necessary for the purchase of imports, including critical ones. The news about Shell’s exit from the Sakhalin-2 project also had an impact on the ruble – the organization will sell its stake and withdraw $1.2 billion from the Russian Federation. As a result, we see that the ruble is falling to the levels of a year ago.

– There is an opinion that a weak ruble is beneficial for the Russian budget, which faced an unprecedented deficit at the beginning of the year. Can the sharp depreciation of the national currency be created by the hands of the Russian financial authorities?

Bakhtin: “The weakening of the national currency is not artificial, it is associated primarily with changes in macroeconomic indicators. Too much weakening of the ruble is fraught with acceleration of inflation, in which the financial authorities are not interested, perhaps, just as in a too strong ruble, when exporters and the budget begin to suffer.

Fedorov: “After the old budget rule ceased to operate in 2022, the exchange rate of the Russian currency began to be directly determined by the dynamics of oil prices. Naturally, due to the absence of non-residents from unfriendly countries on the Russian financial market, there is no one to quickly mortgage changes in oil prices. Therefore, a time lag of about a month has formed, when changes in Russia’s balance of payments are assessed and incorporated into the exchange rate by the market.

The influence on the exchange rate of the Russian financial authorities in this case is quite limited, and it is not necessary, because the foreign exchange market already reflects the changes that have taken place, which compensate for the income of oil exporters and the state.”

Sidorov: “A weak ruble is really beneficial for the budget, because exporters receive revenue in foreign currency, and the more expensive the dollar, the higher their profits and more taxes are transferred to the budget.

But in this situation, it is impossible to say that the authorities are somehow deliberately devaluing the ruble: this is a natural process, taking into account all the economic inputs. In the future, the state will most likely maintain the ruble at a level above 80 per dollar – this will balance budget revenues.”

Samoilenko: “It is impossible to say that the fall of the Russian national currency is a man-made phenomenon. No one lowers the ruble on purpose, the currency is weakening due to several objective economic factors at once and in the absence of positive trends. Although it is known that a hard ruble is beneficial for the population (since prices are not rising), and a weak national currency is beneficial for the state (budget revenues are growing), I am sure that no one does this on purpose.

The exchange rate on the stock exchange changes depending on news, statistics, statements from the Central Bank of the Russian Federation, foreign policy and economic factors.”

– Give a forecast: what awaits the Russian national currency in the near future?

Bakhtin: “In the coming days, it is impossible to exclude reaching extremes of decline, for the dollar this is the area of ​​83.6 rubles. A deeper decline in the ruble is unlikely, and even now the Russian currency looks oversold. From the end of the second decade of April, exporters will start selling foreign currency in advance to pass the tax period. Until the end of April, we expect the dollar to return to the 77-79 area, the euro – 85-87, the yuan – closer to 11.5.

Fedorov: “The ruble in the course of trading has already approached the upper limit of the target range of 79-84 per US dollar. If the Russian currency manages to stabilize at these levels, without breaking through the mark of 84 per dollar, then in May, given the high probability of maintaining positive dynamics in oil prices throughout April, we can expect the ruble to strengthen towards the lower border of the new range – that is, 79 per dollar.

The most important thing for the positive dynamics of the Russian currency in May, firstly, is not to go into the scenario of an extreme fall in the exchange rate, which means not to cross the dividing line of 84-85 per dollar. And secondly, to make sure that oil prices, after a 6% increase at the beginning of this week, have maintained a positive trend, or at least neutral until the end of April.

As for a longer forecast horizon, say until the end of September, the weakening of the Russian currency is expected in July-August – these are traditionally weak months for the ruble. The next target range for the rate can be considered the area of ​​88-93 per US dollar.

Sidorov: “There are no prerequisites for strengthening the national currency, except for oil prices. But it is already clear that world quotes do not support the ruble.

Everyone determines the figures of the budget and exports. So the devaluation of the ruble will continue, this is recognized even by the government, which recently revised its forecast for the average value of the dollar this year to the level of 77 rubles. I think that during the year it will be revised more than once, because the dollar in the short term (within one or two months) can grow to 85 rubles or more.

Samoilenko: “At some point, the national currency will probably consolidate at new levels or roll back, but this will be a level above 80 rubles per dollar. You should not expect that the rate will return to the range of up to 75-80 rubles. And then the weakening will continue and the dollar may rise to 85 rubles, and the euro may cost 93-94 rubles.