It was decided to contain too sharp fluctuations in the exchange rate of the Russian currency
The decree of the President of the Russian Federation on the mandatory sale of foreign currency earnings by exporting companies was extended until April 30, 2025. The Russian government announced this on April 27 in its Telegram channel. Let us recall that the Bank of Russia indicated that the exchange rate of the national currency is affected not by the presidential decree, but by the state of the trade balance and the effects of the monetary policy pursued by the regulator, that is, from the high key rate. About whose right reality will prove and what the dollar exchange rate will now be in May, «MK» experts said.
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The Russian government has extended the decree on the mandatory sale of foreign currency earnings for a year — until April 30, 2025. Let us remember that it was signed by Russian President Vladimir Putin on October 11 last year. After this, the exchange rate of the dollar, which had previously reached 101 rubles several times, began to decline rapidly and by the end of December was within the range of 90-92 rubles. Since then, the national currency exchange rate has stabilized.
However, between the “powers of this world” an active discussion began about why this actually happened. The Ministry of Finance and the government as a whole gave the main credit for this to the presidential decree and insisted on its extension. And the Bank of Russia has repeatedly opposed the extension of this document, emphasizing that a strong balance of payments and a high key rate played a major role in the strengthening of the ruble at the end of 2023. Departmental dispute — both from the “high stands” and on the sidelines of conferences and meetings — kept the entire market on edge. However, experts were inclined to believe that the presidential decree would still be extended for quite pragmatic reasons: after the elections, Russia needs a stable exchange rate for the national currency and established boundaries for the dollar of all the “powers of this world” satisfied. And now the decree has been extended, but no one is in a hurry to place a bet on strengthening or at least strictly stabilizing the ruble exchange rate. On the contrary, experts say that until the end of the year and even in May, the domestic currency will continue to decline gently against the dollar.
“The government, of course, taking into account the opinion of the Bank of Russia, made the decision that it considered necessary. It would seem that the Cabinet of Ministers, to a greater extent than the Central Bank of the Russian Federation, should worry about the interests of exporters. But the government must also take care of the interests of the people, as well as — about the authority of the national currency in countries that are Russia’s most important trading partners. This means that the ruble should be predictable. Therefore, it was decided to curb too sharp fluctuations in the ruble exchange rate by extending the mandatory sale of foreign currency earnings. This measure will not be too beneficial for exporters, but, on the other hand, it should not reduce their competitiveness in the world market. At the same time, a strong ruble can influence the reduction of inflation expectations of the population and contribute to the fight against inflation.
In May, the dollar may fluctuate within the range of 89-96 rubles, the euro — within the range of 97-103 rubles, the yuan will be in the range of 12.4-13.3 rubles. Most likely, by the end of spring, signs of a soft weakening of the Russian currency will be more noticeable and the dollar will cost at least 95 rubles.”
“There was a discussion between the Central Bank and the government about how much the presidential decree on the mandatory sale of foreign currency earnings affects the ruble exchange rate. The mega-regulator believed that there were no grounds for extending this document. But, in my opinion, the decree affects our national currency.
Let me remind you that the Ministry of Finance has big plans to place ruble bonds. And any instability in the ruble will become a negative factor against this background. If the ruble has high volatility against the dollar or yuan, then it will be difficult for Anton Siluanov’s department to place bonds, because everyone will look at foreign exchange instruments, and not at ruble ones. That is why such a measure as the extension of the decree of the President of the Russian Federation on the sale of foreign currency earnings is necessary. If we imagine that any force majeure will arise and the dollar exchange rate will fly to 105 rubles or higher, then there will be big problems with the placement of bonds with the Ministry of Finance, and this should be avoided. So this is a useful measure. But I believe that by the end of the year the ruble will still gradually weaken and we will see the dollar at 105 rubles in December. I have also seen forecasts stating that in the second half of the year the exchange rate of the American currency will be around 94-95 rubles.
The decision to extend the presidential decree, in my opinion, will have a positive impact on the country’s economy: businesses can safely plan purchases abroad. Few people imagine that, for example, in the food industry, a lot of raw materials, flavorings and equipment are still purchased abroad, that is, pegged to the dollar. The situation is similar in many other industries. So a fixed exchange rate will contribute to the confidence of economic agents and entrepreneurs in the future that the dollar will be in a certain range, which makes planning easier under sanctions.
At the end of May, an unfavorable period begins for the ruble. The pressure on our national currency will increase after the end of the tax period, and I expect that the dollar exchange rate after May 2 will be around 94.2 rubles.”
“We can say that the decision to extend the presidential decree was made” based on the arguments of the Ministry of Finance of the Russian Federation, since the Bank of Russia initially advocated terminating the validity of this document. Uncertainty had a bad effect on the Russian currency, and now the ruble should strengthen against the backdrop of this news. Other factors that will influence it are the end of the tax period for exporting companies and further decisions of the Bank of Russia on the key rate.
We need to monitor the behavior of exchange rates in the coming days or even a week, when the news rush subsides . So far, the opening of trading on Monday, April 29, has not been in favor of the national currency. With a swoop, the dollar took an important current watershed at the level of 92.3-92.4 rubles. If the price manages to fully gain a foothold above it now, then the classic rule in the market will work: “The ruble was bought on rumors, but on facts.” sell.» In this scenario, the nearest important psychological mark will be the level of 95 rubles per dollar.”