The ruble will fall before October 1: economists forecast

The state will return to the budget rule and increase imports

Throughout the summer, the ruble exchange rate steadfastly held near 60 per dollar, deviating from it only for a short time – by a maximum of a couple of units in both directions. This caused overt dissatisfaction with the Ministry of Finance, which needs an “economically justified” level of 70 to replenish the budget. But in the fall, the situation will most likely change. It seems that the current reinforced concrete trend, historically unusual for the Russian currency, will be broken.

On the last day of summer, the market quotations of the dollar and the euro rose moderately, reaching 60.20-60.30 respectively. So far, this is very far from the government target (target) of 70 rubles, which is so necessary for exporters and the federal treasury. However, the upcoming autumn months carry a powerful cumulative charge of factors that can put an end to the intransigence of the ruble. It is unlikely that the Russian currency will be able to refute the forecasts of analysts and the hopes of the heads of financial departments as effortlessly as in the period from May to August.

Heavy artillery, designed to “plow” the positions of the deeply dug-in ruble, is waiting in the wings. As previously announced, the Ministry of Finance of the Russian Federation will return to the budget rule by the end of September, albeit in an adjusted format. In any case, the new mechanism involves the sale of rubles by the Central Bank and their exchange for foreign currencies, this time the currencies of “friendly” countries. At the same time, Natalya Milchakova, a leading analyst at Freedom Finance Global, notes that almost all foreign currencies, including the “unfriendly” dollar and euro, will strengthen against the ruble through cross-rates.

“Presumably, foreign exchange interventions will begin before the draft budget is submitted to the State Duma, that is, before October 1,” says Dmitry Babin, an expert on the stock market at BCS Mir Investments. “That should bring the exchange rate back to lower, economically viable levels around 70 to the dollar. The current overvaluation of the ruble has a negative impact on budget revenues, as well as many exporters, whose business is already suffering with might and main because of this.”

How much the rate can fall is a question that remains unanswered. Depending on the volume of interventions, this process can be either soft and gradual, or sharper and more rapid, says Artem Deev, head of the analytical department at AMarkets. And, in the opinion of TeleTrade chief analyst Mark Goykhman, in September the state of the Russian national currency will be determined, first of all, by the ratio of foreign exchange earnings from exporters and demand for it, mainly for imports. Import volumes are gradually increasing, because, firstly, warehouse and industrial stocks are being depleted, secondly, new supply chains are being formed, and thirdly, citizens are returning to everyday purchases after the end of the holiday season.

“In autumn, geopolitical and sanctions unpredictability will continue, and the exchange rate will return to a long-term trend of gradual weakening. In September, its upper limit will be 64-65 rubles per dollar,” Goykhman believes.

On September 21, a regular meeting of the US Federal Reserve Open Market Committee is scheduled to discuss the interest rate, recalls Valentina Savenkova, project manager at Veles Capital investment company. If the rate, as expected, is raised immediately by 0.75%, this will provide global support to the dollar, as it will make US assets more attractive for investment. It is clear that for the ruble this is an additional factor pushing it down.

With such forecasts, should Russians hurry up with the purchase of foreign currency, so as not to regret the missed chance later? Interlocutors of MK answer this question in general in solidarity: today neither the dollar, nor the euro (definitely toxic due to sanctions), nor even the yuan can be considered a completely reliable, win-win tool for saving ruble funds. There is only one reason for such operations: if you are going to travel abroad, to a country where a domestic payment card does not work.

“And if for some reason it is necessary to keep money in dollars, euros, yuan or other foreign currencies, then it is better to do this not in Russian banks,” says Natalya Milchakova. – Many of them have already introduced a commission on foreign currency deposits, the interest on which, in addition, is very low. It’s better to combine business with pleasure: go on vacation to one of the EAEU countries and at the same time open a foreign currency deposit there in one of the local credit institutions.”