MOSCOW, November 24, Nadezhda Sarapina. On the Moscow Exchange, the ruble is trading at 88 dollars and 96 euros. And in October there were 100 and 106, respectively. The mandatory sale of foreign currency earnings and the increase in the key rate to 15 percent had an impact. How sustainable is this trend and what to expect in the near future — in the material .
Fruits of Labor
This year has been particularly difficult for the national currency. The establishment of new supply chains led to an increase in imports and a deterioration in the trade balance. High demand for currency added to the tension, and the weak ruble allowed exporters to increase profits. As a result, in June the fall against the dollar reached ten percent. The Central Bank raised the rate from 8.5 to 12 and agreed with the largest companies on the voluntary sale of proceeds. This fixed the rate at 93.4, but not for long.
In the fall, the dollar again exceeded a hundred. The regulator raised the rate by another two percent. The recovery in oil prices helped. Brent is currently quoted at 81.3 per barrel. In addition, exporters were obliged to sell foreign currency and fines were introduced for violators. “Such measures have demonstrated their effectiveness more than once. In the first half of 2022, we managed to strengthen the ruble to 55 per dollar,” recalls economist and communications director at BitRiver Andrei Loboda. By the way, they operate in much the same way in China.
Business interests
Although tightening monetary policy usually has a negative impact on business activity, economists see no reason to worry. Thus, Loboda points to GDP growth in the third quarter by 5.5 percent in annual terms. Over the nine months, industrial production increased by 3.3 percent, real incomes increased by 5.3, unemployment was only three percent of the working population.
In addition, against the backdrop of a high rate, the demand for imports decreases, and ruble savings become more attractive, says Evgenia Vasilyeva, director of the Ingosstrakh Center for Strategic Analysis. “Foreign purchases have been declining for several months. In October — by two billion dollars compared to September. The trade balance is improving, and this is contributing to the strengthening of the ruble,” she notes.
In general, the government maintains a course towards social stability, which is impossible without a stable currency. Alexander Razuvaev, a member of the supervisory board of the guild of financial analysts and risk managers, believes that the interests of the population in any case should be a priority. The weakening of the ruble depreciates savings. In this sense, the Central Bank is taking the right steps. Deposit rates cannot be less than inflation. “Enterprises need to be adaptive, be able to do business under any credit conditions. Only companies that are already balancing on the brink of break-even will suffer,” explains the expert. In addition, over the past year and a half, the state has introduced many grants and benefits to revive and support domestic business.
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Forecasts and concerns
The rise in price of Urals and the increase in supplies of energy resources freed the state from the need to urgently patch financial holes due to the weak ruble. “In general, we are doing very well, we will close the year with a budget deficit of only one percent of GDP — half as much as expected,” Razuvaev emphasizes.
The main problem remains inflation; according to official data, it has already approaching seven percent on an annual basis. Economists believe that the peak will occur in February-March 2024, followed by a decline. Accordingly, in December the rate may be raised again by one or two percent, which will again strengthen the ruble.
Western experts expect 80 per dollar by spring, writes Bloomberg. According to some Russian estimates, this result is possible before the end of the year. In general, forecasts range from 80 to 92, but most analysts believe that the strengthening is long-term.
“The corridor of 85-95 per dollar will remain, at least until the mandatory sale of proceeds is canceled in March,” says Loboda. However, the gradual improvement of macroeconomic indicators suggests that the collapse of the ruble will not happen later.
This will also be helped by the deal on the exchange of blocked assets, which is currently being worked out by the Central Bank.