Analyst: “The ruble balances like a tightrope walker at a height”
The Russian currency market has probably experienced one of the most unusual weeks in its history. After the sanctions imposed by the American administration on the Moscow Exchange on June 12, the dollar and euro exchange market de facto ceased to function in Russia. Now the Central Bank of the Russian Federation determines the official exchange rate of these currencies in a completely new way — based on data from banking transactions and information from over-the-counter digital platforms. The change in methodology, naturally, could not but affect the exchange rate itself, which over the past days has experienced strong fluctuations.
Before the introduction of sanctions, the dollar cost 89 rubles and kopecks, and the euro – almost 96. By June 20, the ruble strengthened sharply – up to 82 per dollar and 89 – for the euro, and then just as sharply played back. The last week of June, the rate is at almost 88 rubles per dollar and over 94 – per euro. What factors move the exchange rate in the new currency reality, and how will the quotes of “toxic” exchange rates change? currencies in the near future? With these questions «MK» turned to experts: analyst Capital Skills Financial Academy Mark Goikhman and Freedom Finance Global analyst Vladimir Chernov.
Goikhman: The cessation of exchange trading in dollars and euros, which had been customary for decades, not only broke the mechanisms for determining rates. It is important that this happened due to sanctions that complicate settlements, increasing the risks and costs of counterparties, as well as the emotional factor. The ruble, like a tightrope walker, balances, deviating in different directions. I remember the song of Vladimir Vysotsky:
«Look — Here he is walking without insurance.
The slope is a little to the right — falls, disappears!
A little to the left tilt — still can’t be saved!'
The market is looking for new benchmarks, trying to take into account the changing conditions. Payment restrictions have reduced imports and demand for currency. While its supply is supported by the mandatory sale of currency by exporters, the tax period, high oil prices, and the desire of many to get rid of «toxic» currencies. Therefore, the dollar fell from June 13 to 20 — from 90 to 83 rubles. However, panic was quickly stopped. What? The decision to reduce the share of mandatory sale of foreign exchange earnings by exporters from 80% to 60%. The suspension of growth in Brent oil prices from June 20 at the level of 85 dollars per barrel. Increased speculation about an increase in the key rate of the Central Bank of the Russian Federation in July from 16% to 17-18%. Finally, the exchange rates reaching very low levels, attractive for purchases.
Chernov: In the first days, volatility increased due to the emergence of some uncertainty, but the main influence on the strengthening of the value of the Russian national currency was the fall in imports into the country. Strengthening control over compliance with sanctions against the Russian Federation by third countries increases the risks of external pressure on them, which is why many refuse to cooperate with the Russian Federation. As an example: Japan announced the cessation of supplies of new passenger cars to the Russian Federation. As imports fell, exporters continued to sell 80% of their foreign exchange earnings on the stock exchange, in accordance with a presidential decree mandating its repatriation. Thus, an imbalance appeared and the supply of currency exceeded the demand for it. Then the government legislatively approved a reduction in the volume of mandatory sales of foreign currency earnings by exporters from 80% to 60%, which is why demand exceeded supply and the ruble began to weaken again.
: The position of uncertainty, restrictions, sweep of the “tightrope walker’s pole” creates large spreads between purchase and sale prices in banks seeking to “not sell things too cheap” and even make money speculatively. This usually happens during extraordinary events. But this will not last long if the relative market rate remains the same. As the situation gradually calms down, its volatility and spreads decrease. Official and market quotations of currencies are moving closer together. Differences in the rates of the Central Bank and in retail banking will remain, but are already becoming closer. As of June 22, the dollar buying and selling rate in banks fluctuates around 87-92 rubles. Not such a big difference, considering that the spread immediately after the imposition of sanctions on the Moscow Exchange reached 50-200 rubles per dollar.
: In fact, this is the same rate, only the Central Bank analyzes the progress of currency trading at banks and on the over-the-counter market until 15:30 Moscow time and sets the rate based on this data for the next day, that is, with a time lag. Most likely, such exchange rate formation will continue in the near future, since the Central Bank has been preparing for such sanctions for a long time and, I believe, has worked out in practice this particular option as the most effective and acceptable. When volatility in the foreign exchange market decreases, these two rates you are asking about will not be so different from each other.
: In mid-June fluctuations, the ruble showed possible approximate limits of strengthening. It is unlikely that in the foreseeable future the dollar will drop below 81-82 rubles. A noticeable strengthening of the ruble is unprofitable for the budget and exporters. More significant factors are the gradual weakening of the exchange rate. Among them are the gradual formation of new payment conditions for imports, a reduction in the norms for the mandatory sale of foreign currency earnings, and the announced planned increase in the budget deficit. But there are no prerequisites for a sharp fall in the ruble. The exchange rate is likely to remain in the range of 86-94 rubles per dollar in the coming months.
: The US dollar exchange rate will return to the range of 87.5-93.5 and will continue to trade in it, as it is comfortable for exporters and importers. This conclusion can be made based on the fact that since November 2023, quotes for the dollar/ruble currency pair have not left this narrow range, and the Russian President signed a decree on the mandatory sale of foreign currency earnings by exporters at the end of October precisely in order to stabilize the ruble exchange rate. Today, the authorities have reduced the volume of mandatory repatriation of foreign currency earnings by exporters precisely in order to eliminate the imbalance of supply and demand in the market and return the dollar exchange rate to a comfortable range.
Given the fact that this week the Russian government introduced a bill on expansion of the budget deficit for 2024, the dollar exchange rate is more likely to rise to 100 rubles than to fall to 80 rubles. The profit of exporters in ruble equivalent and, as a consequence, the income of the Russian treasury depends on it.
: It is better not to make sudden movements: do not panic, do not immediately rush to buy or sell currency. As in the same Vysotsky song: “Freeze — he has no more than a quarter of the way left to go!” After all, the situation is gradually leveling out. There is no point in getting rid of cash currency. For purchasing — traditional recommendations. It is better to keep savings in different “baskets”. — in rubles and foreign currency. In rubles – thanks to higher interest rates on deposits, reliable government and corporate bonds. In foreign currency – due to the long-term general trend of growth in exchange rates against the ruble,
: It is recommended to buy currency when the dollar exchange rate decreases in the region of 80-83 rubles, and to sell in the region of 94-100 rubles. Since volatility remains elevated and there are risks of aggravation of the geopolitical situation (for example, when the 14th package of EU sanctions against the Russian economy and its energy sector comes into force on June 24), sharp fluctuations in the exchange rate to these levels cannot be ruled out. But then, most likely, the Russian monetary authorities will again stabilize it in a range that is comfortable for everyone.