The dollar exchange rate can either fall to 85 or rise to 100 rubles
Financial departments have found a way to increase the ruble exchange rate. Government currency trading on the Russian market, which the Central Bank will resume in 2024 at the expense of the National Security Fund (NWF), will not be limited. The volume of sales of yuan, which has now become the main export currency for Russia, is expected to increase. However, according to independent experts, this plan may not bring the expected result. This is not profitable for commodity companies, which are already giving the state the lion's share of above-plan export revenues, so the regulator will have to increase the purchase of foreign currency on the exchange. These actions can affect the ruble exchange rate in an unpredictable way: the dollar can either fall to 85 or rise above 100 rubles.
The Central Bank has deciphered its intentions to resume exchange trading in currencies: from January the regulator is ready to sell more yuan from the National Welfare Fund to support the ruble.
The return of the Bank of Russia to foreign exchange operations on the domestic stock market in recent days has become the most discussed event among stock traders. Until the beginning of August of this year, the Central Bank, in the role of an authorized agent of the Ministry of Finance, steadily fulfilled its duties as an implementer of the “budget rule”: excess revenues from export sales of hydrocarbons went to the National Welfare Fund, but with low world oil prices, the Fund’s funds could be used as a financial “safety cushion” federal budget.
Then the state's monetary policy changed. The national currency exchange rate has dropped below 100 rubles per dollar, and at this rate, even buying yuan on the stock exchange (and China is now our country’s main trading partner) does not help increase reserves in the National Welfare Fund. Transactions on the stock exchange were frozen and this maneuver was beneficial: the value of the “green” fell below 90 rubles.
Moreover, in recent months, the assets of the National Welfare Fund have grown from 11.3 trillion to 13.6 trillion rubles. The conclusion is obvious: the accumulated funds can be used for current needs, that is, channeled into the real economy. While the ruble exchange rate remains at a relatively acceptable level, by selling yuan, you can further strengthen the value of your own banknotes. Additional interventions by the Chinese currency will only help stabilize the ruble exchange rate.
Independent experts believe that the regulator is not entirely right in forecasting long-term foreign exchange transactions. “Undoubtedly, after Russian exporters were obliged to sell at least 90% of their foreign earnings on the exchange, the volume of foreign currency sales doubled in just a month and reached 823 billion rubles. Based on such effective statistics, we can assume that next year similar indicators may be even higher,” notes Sergei Suverov, investment strategist at Arikapital Management Company, associate professor at the Financial University under the Government of the Russian Federation. “Meanwhile, most likely, our officials expect that export revenue, due to the increase in the cost of Russian “black gold” in the Asian market compared to European prices, will again be at a high level.”
Such conclusions appear unconvincing. The cost of our energy resources, due to growing geopolitical tensions in the Middle East, can either rise to $100 per barrel (as evidenced by the head of the International Energy Agency, Fatih Birol), or drop to $40 if the economic recession in the world drags on.
In this regard, experts give conflicting forecasts. According to Dmitry Aleksandrov, head of the analytical research department at IVA Partners, the exact volume of foreign exchange transactions will become clear at the end of the year and will depend on additional spending by the Russian budget in December: preliminary, for the first quarter of 2024, it is possible to estimate the volume of currency purchases by the Central Bank at the expense of finance National Welfare Fund from 10-20 billion to 150-170 billion rubles per month.
Director of Russian and CIS markets Valery Tumin agrees with this opinion. “The volume of currency purchases is related to the volume of oil and gas revenues that the National Welfare Fund will receive in 2024. It is predicted that under the new budget rule, oil and gas revenues will amount to 1.8 trillion rubles. The Central Bank will buy currency for this amount,” the expert believes. Transactions in this volume will strengthen the Russian currency to 85-87 rubles per dollar. However, the National Welfare Fund, Russia's last money box, will be emptied by exactly the same amount.