Experts predicted spring prospects for the Russian currency
The Russian national currency is going through one of the most difficult periods in its history. Numerous negative factors hit the ruble: Western sanctions, falling oil prices, the financial collapse of American banks. Against this background, the ruble exchange rate is holding up well: it was stable for almost the entire month of March, only in the last days of the month it lost some ground. What will happen to the currency quotes further — in April? For an answer to this question, MK turned to experts — financial market analysts.
In December 2022, the value of the dollar on domestic exchanges barely reached 70 rubles. Now a «buck» is worth more than 77 rubles. Euro over the same period rose in price from 75 to 84 rubles. The value of both the world's reserve currency has grown by about 10%, actually returning to the levels of a year ago. The Chinese yuan, which Moscow has recently been trying to focus on in its international financial transactions, has made an even greater breakthrough: if at the beginning of January their value was 9.8 rubles, now the yuan exchange rate is 11.2.
— Circumstances affecting the domestic foreign exchange market remain unchanged. These include balance of payments data, oil price dynamics and the dollar index, as well as geopolitical factors. At the beginning of March, our national budget deficit amounted to 3.3 trillion rubles. Prime Minister Mishustin said that the growing deficit was caused by advanced financing of projects. President Putin, in turn, approved the budget for the next three years with a very noticeable deficit: in 2023 it should be 2.93 trillion rubles (2% of GDP), due to increased spending and lower tax revenues from the oil and gas industry. But by 2025, the financial “minus” should decrease to 1.26 trillion rubles (0.7% of GDP). Thus, although in recent months there has been an impression of a depreciation of the Russian national currency, there is potential for an increase in the value of the ruble in the future.
— The Russian currency has a general weakening trend due to external and internal reasons. Banking problems in the US and Europe in March increased global economic risks and increased the likelihood of a slowdown in the global economy. This led to a general negative in relation to the currencies of emerging markets, which include the ruble. At the same time, there was a direct impact on the «wooden» sector, since a slowdown in the economy is expected to reduce demand for raw materials, trade in which continues to close budget «holes». At first, oil prices fell from $87 to $70 per barrel of Brent, but after the severity of the crisis of Western credit institutions smoothed out, quotes rose above $78, which led to a halt in the depreciation of Russian money at the turn of 76-77 rubles per dollar.
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— The price of Brent exceeded $78. Demand for hydrocarbon futures rose against the backdrop of two factors: the risk of a weakening dollar (according to Bloomberg experts, the attractiveness of the «buck» has shaken due to the lack of reliable information about the level of interest rate hikes by the US Federal Reserve). In addition, Reuters stated that oil supplies from Iraqi Kurdistan would be suspended. We are talking about 450 thousand barrels per day. The arbitration of the International Chamber of Commerce (ICC) decided that the export of “black gold” from this region to Turkey via the Kirkuk-Ceyhan pipeline is illegal. At the same time, Russia announced that it would reduce daily oil production by 500,000 «barrels» until mid-summer. Oil quotes are sensitive to such reports. The focus of market traders is shifting to the OPEC+ meeting scheduled for early April. At the upcoming summit, the issue of stabilizing prices for raw materials will be raised. The Alliance carefully monitors the dynamics of quotations and is ready to respond quickly to prevent the price of hydrocarbons from falling. If fuel continues to get cheaper, the organization may think about further reduction in production. The growing problems of the dollar will have a positive impact on the ruble.
— April oil prices also depend on the hardships of the Western banking sector, the ideas of the participants of the stock exchanges about the upcoming global recession, and, of course, on the decisions taken by the OPEC + participants. In mid-spring, it is likely that the manifestations of the slowdown in the international economy and the decline in demand for raw materials in the world will not yet be so obvious. The severity of problems with American and European banks is smoothing out, and the consumption of raw materials in China, after the easing of anti-COVID restrictions, is gradually getting better. It can be assumed that the price of a barrel will fluctuate around $80 with an amplitude of $3-4 per barrel on one side or the other.
— «Unfriendly» countries did everything to get Moscow closer to Beijing, which reduced the attractiveness of the dollar and the euro in international settlements. Anti-Russian sanctions have made the Chinese currency more in demand for ordinary Russians. As follows from the latest review of the Central Bank, net purchases of Chinese yuan by individuals in Russia last year amounted to 138 billion rubles (in equivalent). Retail investors acted as one of the main buyers of foreign exchange earnings of exporters on the stock exchange. Russians purchased non-cash Chinese currency through bank applications, opened deposits and accumulated cash yuan. Banks announced an increased demand for products in yuan. At the end of 2022, the trading turnover of buying and selling yuan on the Moscow Exchange also increased significantly — their average daily volume is about $1.4 billion. The Chinese currency is an excellent replacement for the euro and the dollar, since it correlates 93% of calculations in the main reserve currencies of the planet. As storage, it is not necessary to buy cash yuan. It is enough to have a brokerage account through which you can buy and sell money without leaving your home.
— The Chinese currency is an excellent means of accumulation for Russian citizens in the conditions of disconnection from external financial systems and the complication of interaction with Western business. Yuan is a currency completely controlled by the PRC authorities. This is simply the least of the evils left to domestic investors for domestic currency diversification. The yuan will not be blocked in Russia, but the international risks of the Celestial currency continue to remain. As a deposit in a brokerage account, the yuan is the best option compared to the dollar and the euro, but as a cash use, these banknotes are absolutely inconvenient.
— A possible increase in geopolitical tension will lead to a decrease in the value of the Russian currency and an increase in the dollar as a “protective asset”. In this case, we can predict an increase in the cost of the «American» to 80 rubles. The euro will rise to the area of 85 rubles. At the same time, the demand for the yuan, as the most reliable foreign currency, an alternative to dollars and euros, will increase on the part of the ordinary Russian population. Its value may rise to 12 rubles.
— There is a high probability of further weakening of the ruble in April. Rates can fluctuate in the ranges of 75-79 rubles to the dollar, 11-11.5 rubles to the yuan and 80-85 rubles to the euro. At the same time, it is better not to keep dollars and euros on bank accounts because of the risks of their blocking and high commissions. The yuan or dollar-pegged currencies (the Hong Kong dollar and the UAE dirham) look much more preferable in the current environment. But it’s still better to have traditional reserve currencies in cash — no one is going to argue that a “live” dollar is better than a cash yuan.