The euro exchange rate exceeded 100 rubles, the dollar and the yuan strengthened to highs since March 2022
On the morning of Thursday, July 6, the euro took a psychological mark of 100 rubles. Over the past month, the European currency has strengthened by more than 15 percent, as early as June 6, its rate was in the region of 87 rubles, according to data Moscow Exchange.
The dollar rose above 92.5 rubles, for a month it added about 11 rubles. Yuan reached the mark of 12.79 rubles.
For all major currencies of Russian foreign trade, the corresponding values have become a record since the end of March 2022. Such a sharp weakening of the ruble came as a surprise to most analysts. Even at the beginning of the summer, they did not expect to see the dollar more expensive than 83-84 rubles by the end of June. However, in the current circumstances, experts are betting on the continuation of the trend.
I had a target of 90 rubles per dollar for August, but we have overcome it now. 100 rubles per dollar over the next month and a half seems too much to me, I would still aim at 95. But, on the other hand, our summer months are traditionally quite turbulent, and I cannot rule out such a scenario.
During the year, the euro and dollar rates rose by more than one and a half times, the yuan strengthened less, but this is due to the depreciation of its exchange rate against the dollar. Problems for the ruble began in December 2022 after the imposition of sanctions on Russian oil. Since then, the Russian currency has remained one of the worst in the world in terms of exchange rate dynamics.
At the end of June, the mutiny of the Wagner PMC, which ended with a one-day march on Moscow, additionally affected the situation. As a result, even the end of the tax period could not support the ruble.
However, the main factor affecting the Russian currency under the current restrictions of the Central Bank (the maximum amount of currency withdrawal, the ban on withdrawing cash dollars and euros from accounts) remains the ratio of imports and exports in monetary terms. The latter primarily depends on oil and gas revenues, and they are gradually declining.
526.8
billion rubles
amounted to oil and gas revenues of the Russian budget in June
This volume has become the minimum since February 2023, while a year ago the budget received 190 billion rubles more. Even a sharp reduction in payments to oilmen under the damper mechanism – from 103.5 billion in May to 78.6 billion – could not correct the situation.
At the same time, the Ministry of Finance halves the sale of yuan under the budget rule. From July 7 to August 4, daily sales will amount to only the equivalent of 1.7 billion rubles.
Analysts point out that it is difficult to find positive factors for the ruble without administrative interference in one form or another. So far, the regulator does not see risks to financial stability. Although at the same time, Deputy Chairman of the Bank of Russia Alexei Zabotkin warned of a possible rate hike at the next meeting of the Board of Directors on July 21 in order to keep inflation in check.
We see that the balance of risks is increasingly skewed towards pro-inflationary
However, the ability of the Central Bank to influence the ruble exchange rate by raising or lowering the rate remains in question. A year ago, when an overstrong ruble was the problem amid record oil and gas revenues, a sharp easing of monetary policy did nothing to remedy the situation. Now the possible demand for more profitable Russian securities may not compensate for the lack of dollars for imports.
Since August, Russia has pledged to cut oil exports by 500,000 barrels per day to support oil prices. However, world quotes reacted weakly to this statement, and if the situation does not change, then oil and gas revenues will further decline.
At the same time, the cost of imports is gradually increasing. Since spring, Russian transport companies have been complaining about tightening the terms of deliveries through Kazakhstan, Armenia and Turkey. U.S. and European authorities have been focusing in recent months on enforcing sanctions already in place, making bypass routes more expensive.
Related materials:
The situation in the gas industry also remains unclear. According to Refinitiv Eikon, by the end of the first half of the year, export volumes of liquefied natural gas (LNG) from Russia decreased by 9.4 percent, to 14.4 million tons, and this situation was caused by a drop in fuel sales to Asia, that is, to friendly countries, not to Europe. Thus, it is difficult to count on the influx of foreign currency in the gas industry.
To strengthen the ruble, the Central Bank can use a number of administrative measures. For example, tighten control over the withdrawal of capital, return restrictions for it, or introduce a mandatory sale of foreign exchange earnings. Economist, professor at the Higher School of Economics Evgeny Kogan thinksthat the regulator will try to influence the market in the near future in order to prevent panic and mitigate the negative consequences for business. At the same time, he considers arguments about the benefits for the budget from a weak ruble, at least controversial.
Along with the growth of tax revenues due to devaluation, on the other hand, there is a chance to get a slowdown in business activity, a decrease in investment, stagnation of the economy, which can just hit tax revenues and, as a result, budget revenues
Analysts’ estimates do not take into account certain possible circumstances related to geopolitics, sanctions or other problems. They relate to current trends formed in the last six months. Representatives of the business community are also inclined to think that the ruble cannot be expected to strengthen, and they warn of an increase in prices for certain categories of goods – cars, electronics, household appliances due to an increase in the price of imports of finished products and components.
#euro #exchange #rate #reached #rubles #expect #growth