No major fluctuations are expected
The best time to buy currency from Russian tourists is running out. This conclusion can be made by reading the trading data of the Moscow Exchange, where from May 29 the ruble began to gradually fall in price against the dollar and the euro. And on the last day of spring, the dollar strengthened by 1.05%, and the euro by 0.51%. From the April minimum to the May maximum, the national currency immediately gained 6% of its value from the dollar. However, the ruble will most likely not be able to further consolidate its success. What will the exchange rate of the dollar, euro and yuan be in June and what factors will have the strongest impact on the foreign exchange market, experts told MK.
“After passing the peak of tax payments on May 28, the ruble began to lose ground, having lost the additional supply of foreign currency from exporters who sold it to fulfill tax obligations. The moderate weakening of the ruble may continue in early June due to a reduction in the quantitative volume of exports caused by sanctions and geopolitics. True, these same reasons also put pressure on imports, together with the strict monetary policy of the Central Bank of the Russian Federation, which limits the potential rate of depreciation of the ruble over the medium term.
In addition, since mid-April, oil prices have dropped significantly, which with a certain time lag reduces the monetary component of exports. Despite the fact that oil prices have started to rise in recent days, this, at best, will have a positive impact on the ruble exchange rate in a month.
It is unlikely that even an increase in the key rate or signals from the Central Bank about an increase in the likelihood of such a decision at the next meetings will have a stable impact on the ruble. Previously, investors and speculators, including foreign ones, quickly incorporated expectations of such events into its course. The number of such participants in the Russian foreign exchange market has decreased significantly since February 2022. Now the dynamics of the exchange rate are mainly determined by the foreign trade factor, which, with a significant delay, reflects changes in the global market for raw materials, as well as the influence of sanctions and geopolitics on the dynamics of imports and exports.
At the beginning of June, the volume of operations of the Central Bank of the Russian Federation on the foreign exchange market in the next monthly period will be announced to implement the budget rule, as well as other transactions at the expense of the National Welfare Fund. It is possible that sales of foreign currency will increase due to a likely reduction in demand for gold and foreign exchange assets from the Ministry of Finance, caused by a decrease in oil and gas excess budget revenues. More importantly, this will be the last monthly period, concluding the half-year, in which the Bank of Russia had to sell 11.8 billion rubles worth of foreign currency every day. This amount was adjusted to the volume that needed to be sold or purchased by the Ministry of Finance. Starting from July, a significant supply of foreign currency from the Bank of Russia will leave the market. This may increase pressure on the ruble exchange rate. In June, the dollar exchange rate will fluctuate between 90-92 rubles, the euro will fetch 97.2-99.4 rubles, and the yuan will be in the range of 12.4-12.7 rubles.”
“The strengthening of the ruble that occurred the day before was caused by several factors. Firstly, payments of taxes and dividends by importing companies in rubles, which required the exchange of foreign currency earnings. The next market factor is the St. Petersburg International Economic Forum (SPIEF, this year it will be held from June 5 to 8 — editor's note), during which the Bank of Russia would like to demonstrate the stability of the ruble.
Of course, the key rate has a significant strengthening effect on the ruble and the expectation of its possible growth leads to a strengthening of the ruble. There are foreign trade factors, for example, the agreements reached on payment for imported coal and oil to India in rubles also leads to its strengthening. The decrease in the ruble exchange rate may be due to the continuing growth of inflation and a decrease in economic activity in the country due to the high cost of money.
At the moment, it is advisable for Russians to invest in foreign currency financial instruments, since the dollar exchange rate will strengthen during the election campaign in the United States, but by the election date it may again decline significantly due to the unpredictability of the election results and the intensification of the political struggle, which will negatively affect the American economy.” .
“We believe that at the beginning of June the national currency exchange rate will remain stable and will trade in the established ranges of 88-92 rubles per dollar, 96-100 rubles per euro, 12. 1-12.7 rubles per yuan.
In general, the factors for the strengthening and weakening of the ruble remain balanced, which has ensured exchange rate stability for seven months in a row. The ruble to dollar exchange rate has remained in the range of 87-94 for seven months in a row and we expect that the ruble will remain there in the coming months.
The ruble is supported by the mandatory sale of foreign currency earnings for the largest exporters and high oil prices and a surplus in the current account of the balance of payments of the Russian Federation, sales of yuan from reserves at 6.2 billion rubles per day as part of budget operations, as well as high ruble interest rates.
We expect that the Bank of Russia will raise the key rate to 17% at its upcoming meetings and keep it at this level until the end of the year. Following this, deposit rates will likely increase by a comparable amount, which will further increase the attractiveness of ruble savings.
The ruble is also supported by a decrease in imports due to problems with payments with friendly countries due to US sanctions. Normalization of the situation with payments to China, India and other friendly countries will be an important factor for the dynamics of the ruble exchange rate.
We expect Brent oil prices to remain in the established range of $80-85 per barrel in June. This will support Russian exports and will have a positive effect on the ruble exchange rate.
Negative factors for the ruble are the seasonally increasing demand for currency since May, including for foreign tourism (for example, summer holidays to Turkey), geopolitical and sanctions risks, capital outflow, demand for currency to buy out shares of Russian companies from foreign owners, increased budgetary expenses, which, among other things, go to the purchase of imports.
We believe that the ruble will remain stable this year and interest rates on deposits and bonds in rubles (15-17%) are very attractive, therefore It is now most profitable for Russians to keep most of their savings in rubles. A small portion of savings can be held in foreign exchange assets — for example, cash, yuan deposits, dollar, euro and yuan substitute bonds.
We expect that in this quarter the average exchange rate of the ruble to the dollar will be 92 rubles, and in the third and fourth we expect an average rate of 95 rubles per dollar.”
“Currently, the external situation for the ruble is favorable. High oil prices contribute to the growth of export revenues and a solid influx of foreign currency into the domestic market, while in fact, money under oil contracts arrives with a delay of up to two months, so we still receive higher incomes for March-April, when oil prices soared . In turn, the extension of the presidential decree on the mandatory sale of foreign currency earnings contributes to an even greater volume of foreign currency supply on the market. The greater the oil and gas revenues, the more foreign exchange earnings are sold. However, this measure currently provides more restrained support than previously, as the trend towards a reduction in the inflow of hard currency into the country continues: in March, the share of export payments in hard currency decreased to 17.8% compared to 23.8% at the beginning of the year , 39% in March 2023 and 84.7% in March 2022.
At the same time, imports are carried out to a much greater extent in hard currencies (25.3% in March 2024). And if now imports are showing moderate growth rates due to problems with cross-border payments, then in the longer term we believe that ways will be found to resolve the issue of payments for imports. This may lead to an increase in imports and a decrease in the trade balance, which, in turn, will be negative for the ruble exchange rate.
The previously observed strengthening of the ruble will not be long-term. And it is quite likely to expect that in June the demand for foreign currency from the population will increase during the holiday period. On the other hand, we expect a return to stronger import growth while export growth slows, which will reduce the supply of foreign currency in the domestic market. Thus, in the short term, the balance of risks is in favor of a moderate strengthening of the ruble towards the lower limit of the range of 88.5-93.5 rubles per US dollar, 12.15-12.65 per one Chinese yuan and 96-99 rubles per one euro.”
“We expect that at the beginning of June the ruble will maintain the positions occupied during May. The dollar exchange rate will be slightly lower or at the level of 90 rubles, for the euro — slightly lower or at the level of 97.5-98 rubles, for the yuan — slightly lower or at the level of 12.4-12.5 rubles. In May, the ruble received active support from strong trade balance indicators in the spring months. Support from exports in the summer months will become less, but imports will continue to grow weakly due to restrictions in external payments and will help the ruble.
The main influence on the ruble will continue to be the state of the balance of payments and trade of the Russian Federation. By the end of May, oil prices are already noticeably lower than spring peaks, so in the summer months the influx of foreign exchange earnings from exports may slow down compared to the May period. However, problems with payments for imports, apparently, will remain in force for now, which will support the trade balance and the ruble exchange rate in the context of a slowdown in exports.”