Factors that could cause the national currency to collapse at the end of summer have been named
July turned out to be a surprisingly calm month for the domestic currency market. Neither the June sanctions against the Moscow Exchange, nor the reduction in the volume of mandatory sale of foreign exchange earnings, nor high-profile geopolitical events (such as the assassination attempt on Trump and Biden's withdrawal from the presidential race) had almost no effect on the ruble exchange rate. For almost the entire month, it fluctuated within a very narrow range: 86–87 rubles per dollar, 93–94 per euro.
But will such stability continue in the coming August – a month that has a certain mystical “glory” in our country as the most unfortunate month for the ruble? “MK” found out the opinion of experts on this matter: financial analyst of BitRiver Vladislav Antonov, financial adviser, author of the “Economism” project Alexey Krichevsky and analyst of Freedom Finance Global Vladimir Chernov.
«Indeed, since August 1998, when Russia experienced a default, society has had a special attitude towards this month. However, historical fears are not always justified. It is important to learn to analyze current economic conditions, and not just look back at the past. Financial literacy is the key to understanding that the economy is cyclical and most events can be predicted and prepared for. Instead of giving in to panic, it is important to develop your financial literacy, learn to manage your savings and be prepared for changes. It is important to remember that history is an important lesson, but the present requires a careful and balanced approach.»
: «If we perceive August as an exclusively crisis month, then it is better not to leave the house at all during this period. I would like to remind you that COVID and quarantine caught Russia in February-March, the collapse of the ruble due to sanctions after the SVO also happened in February, the collapse in 2014 happened in December. Why is August considered some kind of horror because of the already distant crisis of 1998? If we talk about whether the ruble will collapse in the coming August or not, then no one knows the answer to this question. Another thing is that there is a possibility that by the end of the year we will still see the dollar at 95-100 not for a short period of time, but on a permanent basis. But it is unlikely that the last summer month will be to blame for this. In August, you need to rest, and not be afraid of «black swans» — they will still arrive if they have to.»
«In August 2024, we should not expect a collapse in the value of the Russian national currency, since it is protected from this by the presidential decree on the mandatory sale of foreign exchange earnings, thanks to which it was possible to keep the value of the Russian ruble in a comfortable range for 8 months in a row. In June 2024, the opposite situation arose, since the ruble began to strengthen after the introduction of sanctions against the Moscow Exchange and the NCC, and it became necessary to keep it from growing. Against this background, the Russian authorities reduced the volume of mandatory repatriation of export foreign exchange earnings first from 80% to 60%, and then to 40%. That is, the authorities have a mechanism for regulating the ruble exchange rate, and if it falls sharply below comfortable levels, they will be able to increase the volume of mandatory sale of foreign exchange earnings back to 60% or 80%. Therefore, I do not see any obvious reasons for the fall of the ruble in the coming August.»
At the moment, the ruble exchange rate is formed under the influence of many factors. Firstly, this is the monetary policy of the Central Bank of Russia. It is pursuing a strict monetary policy aimed at containing inflation. The rate was recently raised from 16% to 18%, which can stabilize the ruble exchange rate, limiting its decline.
Secondly, the sanctions imposed on Russia have a significant impact on the financial system and trade. A special place here is occupied by fears of secondary sanctions, which complicates settlement transactions for importers and exporters.
Thirdly, oil prices and yuan trading. The oil market has traditionally influenced the ruble, but in the current geopolitical situation and the increase in the volume of trading in the Chinese yuan, this effect has become less pronounced.
Fourthly, cash flows associated with tax and dividend payments. At the end of each month, including August, companies pay taxes, which increases demand for the ruble. This traditionally temporarily supports its exchange rate.»
«The exchange rate is essentially influenced only by supply and demand on the over-the-counter market, together with the balance of imports and exports. If we import less, then the demand for currency will be lower, and the ruble will strengthen. If we export less, and foreign exchange earnings decrease, then supply will narrow and the ruble will go down. In principle, globally, nothing has changed here after the introduction of sanctions.»
“The exchange rate of the national currency, as before, is mainly influenced by the balance of supply and demand, only now the conversion of rubles into dollars and euros is carried out not on the Moscow Exchange, but in Russian banks and over-the-counter trading.
I would call the increase in the current account surplus of the Russian Federation's trade balance the most significant for the ruble exchange rate, since it almost doubled in annual terms from January to June 2024, to $40.6 billion, against the backdrop of falling import volumes into the country and growing export volumes from the Russian Federation. Thus, an «overhang» of currency supply over demand is created in Russia, which should push the ruble to strengthen if the exchange rate is not regulated «manually». Due to the tightening of sanctions pressure on Russia's foreign economic partners, imports of goods and services into the country in August of this year may continue to decline, and the positive trade balance may increase.»
“Against the background of these factors, we can expect that the ruble exchange rate will remain trading near current levels. The dollar will continue to fluctuate below 90 rubles, although the optimal level for the current situation is the range of 90-93 rubles per dollar. This is due, on the one hand, to the strict monetary policy of the Central Bank and tax payments, and on the other hand, to a possible deterioration in the foreign economic situation, sanctions risks and an increase in the budget deficit.”
: “The rate for individuals in bank branches will always depend on the Central Bank rate — it is by it that banks are guided when selling or buying currency. As for the numbers, the likelihood of the ruble strengthening above 83-85 per dollar is extremely low, even despite the Central Bank’s decision to raise the key rate — it seems that holding in rubles and opening deposits is now more profitable than holding or buying foreign currency. The reason is simple — it is not profitable for the budget. Therefore, the main scenario is a range of around 85-90 per dollar.”
: “According to our forecasts, in August 2024, the official exchange rate of the US dollar will return to the range of 87-90 rubles, and the bank rate will be at 3 -5 rubles less profitable than the official one, depending on the position of a particular bank.”