Negative fundamental factors are playing against the Russian currency
On Monday, July 10, after several extremely turbulent previous stock exchange weeks, the currency market was relatively calm. The official exchange rate set by the Central Bank on July 11 practically does not differ from the previous value. But so far there is no point in saying that now the Russian currency will surely find peace and equilibrium. The ruble only dreams of peace, and for a very long time.
“The ruble is stable amid the multidirectional dynamics of global capital markets,” news reports are now full of such lengthy formulations. Well, that's great. However, there are questions: how stable is it, for how long is it stable, what events can bring it down below its current values of 91-92 for an “American” and 99-100 for a “European”, and which events can strengthen it to at least 80 and 90, respectively?< /p>
Last week, the rate showed significant fluctuations: only on July 6, the dollar rose in price by almost 3 rubles, and then fell in price by the same amount. What will prevent these «hills» from repeating in the near future?
By the way, July 6 was not an easy day: Elvira Nabiullina spoke at the Financial Congress in St. Petersburg. The head of the Central Bank said at a briefing that the weakening of the ruble does not carry the risk of financial destabilization, and that any exchange rate is acceptable for the regulator. Meanwhile, the ruble has been depreciating for nine consecutive weeks and has lost 30% of its value since the beginning of the year. Did the theses spoken in the city on the Neva render him a good service? And is the trend reversal possible (as the heads of the largest state-owned banks of the Russian Federation are sure of) in a fundamentally unfavorable environment — an accelerated outflow of capital abroad, a sharp reduction in the positive balance of trade, a 25% growth in the ruble money supply since the beginning of the year, high demand for hard, although officially toxic western currency, general economic and geopolitical uncertainty?
In addition, export earnings enter the country not so much in the form of dollars and euros (as a year and a half ago), but in the form of a huge number of not quite adequate “substitutes” — the Chinese yuan, the Indian rupee, the UAE dirham. Which also does not have the best effect on the ruble exchange rate.
“Usually a long period of currency weakening is replaced by a serious corrective rollback, such is the universal property of stock trading,” says financial analyst Sergei Drozdov. — In the case of the ruble, this did not happen: in April, the dollar traded at 77, a few days ago — at 94, and today — at 91. Market players clearly do not believe in the imminent strengthening of the Russian currency, and their skepticism was reinforced by comments from the leadership of the Central Bank, according to who “everything is calm in Baghdad”, there is no need to support the ruble exchange rate.
In general, there is no point in making any forecasts regarding exchange rate dynamics now: the situation is not right. It is only obvious, Drozdov argues, that the longer the uncertainty in the economy and geopolitics persists, the worse it will be for the ruble and the population. Markets will certainly adapt to any of its conditions, respectively, any import — both parallel and non-parallel — will begin to come to Russia at different prices. Household appliances, electronics, computers, gadgets, cars — all this will rise in price in accordance with the exchange rate, as stocks are exhausted.
“No one is yet struggling with the obvious trend towards the weakening of the ruble,” says Andrey Loboda, economist, director of communications at BitRiver. — The maximum level of «drawdown» is seen today in the region of 120 per dollar. Apparently, only a sharp increase in the key rate of the Central Bank and the currently observed comfortable situation in the oil market can keep the dollar in the range of 89-92 by the end of July. Against the backdrop of the continued withdrawal of capital from the country and the continued budget deficit, the ruble will remain under pressure as long as it is not critical for the monetary authorities.”
It is too early to talk about the stabilization of the Russian currency due to the totality of circumstances. The dynamics of Russia's foreign trade is slowing down, commodity prices and export earnings continue to decline, said Artem Deev, head of the analytical department at AMarkets. In his opinion, since the Central Bank and the Ministry of Finance do not see anything wrong with the current exchange rate, only the dollar crossing the 100-ruble line and the euro jump to 150-170 can force them to intervene in events. But this will not happen, the expert is sure: in reality, the «American» will not reach the mark of 95 rubles, and the «European» — up to 110.