Thus, on Monday, Russian presidential advisor Maxim Oreshkin stated that the peak of the ruble’s weakening has already passed and that in the coming months there will be a surplus of foreign currency on the market. In addition, Oreshkin reported that the government and the Bank of Russia are working on a package of measures to limit capital outflows and that some decisions have already been made.
Oreshkin stated on Tuesday that fundamental factors, the current balance of payments and good forecasts for the federal budget create preconditions for the strengthening of the ruble in the coming months.
Later, Russian President Vladimir Putin said Russian authorities see a “moderate” return in foreign exchange earnings from exporters, so they will negotiate with companies, including through a likely tightening of currency controls.
“From this we conclude that the task of stabilizing the ruble exchange rate is still solved and new measures will be introduced soon,” Vasiliev noted.
The ruble is further supported by rising oil prices and expectations of a key rate hike on Friday.
The strong movement of the ruble towards its strengthening in the morning session on Tuesday is due to low market liquidity, explains the expert. Before the opening of the main session at 10:00, the main participants are usually absent, so the market is subject to speculative fluctuations.
“In the base scenario, we do not expect a significant strengthening of the ruble relative to current levels. We believe that this week the ruble will be quoted in the range of 93-97 rubles per dollar, 100-104 rubles per euro, 12.7- 13.3 rubles… for the yuan,” Vasiliev predicts.
According to him, from an economic point of view the trend of the last nine months towards the weakening of the ruble continues. The current supply of foreign currency from exports is not enough to meet the growing demand for foreign currency to purchase imports, and the demand for foreign currency is also high due to geopolitical, fiscal and inflation risks, Vasiliev says.
“Therefore, the dynamics of the ruble will largely depend on the specific decisions that will be made in the near future to support the ruble (increasing the sale of foreign exchange earnings by exporters and tightening restrictions on capital outflows We hope that in the end, starting in September, the ruble will be quoted close to current levels,” adds the expert.
In his opinion, starting in the fall the ruble could receive support from oil prices. The approximate gap between high oil prices and the supply of foreign exchange from export earnings to the Russian foreign exchange market, according to estimates by the Bank of Russia, is two to three months. Brent oil prices consolidated above $80 per barrel in July, so a positive impact on the ruble is very likely in September-October.
“In general, we maintain our expectations that the ruble will remain in the range of 90-100 rubles per dollar until the end of the year. In our forecasts for the fourth quarter we include the average exchange rate of the ruble to the dollar at the level of 98 rubles per dollar, 106 rubles per dollar, euro and 13.3 rubles per yuan,” Vasiliev said.
