What to expect from the ruble in November: analyst Osadchy gave a forecast for the exchange rate

“We’ve seen the dollar rate at 100 rubles twice already—we’ll see it the third time, don’t doubt it!”

A month ago, the rate of the domestic currency pushed off from the “dangerous” level of 100 rubles per dollar and by the end of this stock exchange week, on November 10, it consolidated near the level of 92 rubles per “American”. Exchange traders and financial analysts consider the main reasons for the strengthening of the national currency to be the measures taken by the leadership of our country – in particular, the mandatory sale of foreign currency earnings by a number of exporting companies. A sharp increase in the key rate by the Bank of Russia, by 2 percentage points, also played a positive role. It is curious that geopolitics is also contributing to the strengthening of the ruble, although previously it played against the domestic currency. Maxim Osadchy, head of the analytical department of BKF Bank, told MK about this.

— The ruble has been strengthening for the fifth week in a row, which we have not seen since the beginning of autumn last year. Why is this happening?

— A powerful factor in the “rebound” was the decree of the President of Russia on the mandatory sale of proceeds in foreign currency received by individual Russian exporters under foreign trade contracts dated October 11. The next day the dollar collapsed.

In addition, the strengthening of the ruble was helped by a powerful foreign policy shock – the escalation of the Palestinian-Israeli conflict due to the Hamas invasion of Israel on October 7. The risks of Iran entering into a conflict and, as a consequence, the threat of a blockade of the Strait of Hormuz, through which a significant part of the world’s oil traffic passes, contributed to an increase in oil prices.

The strengthening of the ruble was also facilitated by the further tightening of the monetary policy of the Central Bank – the increase in the key rate to 15% on October 27.

“But all these events happened in October. What influences the strengthening of the ruble in November?

— In addition to the three “surprise” factors mentioned, there are also more “long-term” reasons. For example, the strengthening of the ruble is facilitated by the switching of Russian oil exports to China, India and Turkey. These countries ignore the ceiling on the price of Russian oil, set by the West at $60 per barrel. As a result, the average price of exported Russian oil in October exceeded $80 per barrel.

The strengthening of the ruble against the backdrop of a high key rate makes carry trade attractive – this is the name given to operations of borrowing currency in countries with a low rate, converting the currency into rubles and placing it in instruments denominated in rubles with a high yield. For example, deposits or bonds. In the current conditions, such a strategy can be implemented, first of all, in yuan. The influx of currency as part of the carry trade may also contribute to the strengthening of the ruble. However, this is speculative capital; it leaves as quickly as it comes.

— Earlier, at the end of summer – beginning of autumn, when the ruble was weakening, experts argued that this was due to the state of the country’s trade balance. Is this factor not working now?

– Of course it works. It’s just that the effect of three “surprise” factors turned out to be stronger than the long-term trend of import growth. In addition, the devaluation contributed to a decrease in demand for imports and an increase in exports.

— So what will happen next to the ruble?

— Easing tensions in the Gaza Strip and lower oil prices could return the ruble to the path of devaluation. The ongoing geopolitical conflict in Ukraine is the main factor contributing to the weakening of the ruble. The exodus of non-residents from Russia continues; their withdrawal of assets abroad also works against the ruble.

If you look at the ruble exchange rate chart, say, over the last 20 years, you will notice a pattern: after each powerful shock (the crises of 2008-2009 and 2014-2015, the geopolitical shock of February-March 2022), accompanied by a noticeable weakening of the ruble, there was inevitably rebound, trend reversal. But just as inevitably, a new shock soon came, and the dollar in Russia rushed to new heights. Moreover, once the maximum was reached, it was inevitably repeated. So, if we have seen the dollar rate at 100 rubles twice already, we will see it a third time, don’t even doubt it.