The euro exchange rate exceeded 83.5 rubles, the dollar rose to 77 rubles, the last time such values were seen in April-May last year. Banks have already revised their ruble exchange rate forecasts downward. Analysts emphasize that events in the global financial arena are developing rapidly and unpredictably. What puts pressure on the Russian currency, in what range it can gain a foothold in the second quarter and what to expect in the foreseeable future – Izvestia found out.
sagging oil
The euro exchange rate during trading on March 23 exceeded the mark of 83.5 rubles, the currency has grown by 7.8% since the beginning of the year. The dollar last week overcame the mark of 77 rubles, the last time such indicators were observed in April-May 2022. Since the beginning of the year, the American currency has risen in price against the Russian one by 7.6%.
A number of banks began to revise their forecasts for the Russian currency for the worse. Thus, Tinkoff Investments, in its December strategy, predicted an exchange rate of 67-70 rubles per dollar in the first half of 2023. Now in the second quarter the dollar is at 73-75 rubles, by the end of the year – at 74-78. Promsvyazbank raised the average annual rate from 72.2 to 78.5 rubles per dollar. The forecast value of the exchange rate at the end of the current year has changed from 78.2 to 82 rubles per dollar.
There are several reasons for the weakening of the ruble, primarily the fall in the cost of energy resources and sectional pressure. Against the background of the developing banking crisis in the United States and the threat of a recession, oil has noticeably fallen in price. Investors fear a decrease in demand for energy resources. As a result, since the beginning of the month, Brent on the London Stock Exchange has fallen by 19.4% and now fluctuates around $77.1 per barrel.
Import and budget
The recovery of imports was added to the factors negatively affecting the Russian currency.
“The visit of the Chairman of the Communist Party of China Xi Jinping to Moscow gave hope for the restoration of imports of Chinese goods. Of course, this is negative for the ruble, as business begins to arrange the supply of goods, which means it sells the ruble and buys the yuan,” explains financial analyst and trader Artem Zvezdin.
A positive for the ruble is the increase in energy supplies to China in the future. However, exports will not operate at full capacity until 2024.
The analyst draws attention to the fact that the outflow of ruble savings of citizens is also increasing. Against the background of the systematic fall of the ruble, of course, the desire of citizens to remain in rubles is rapidly falling. Part of the money goes to foreign accounts, part is converted into the currency of other countries or goes into cryptocurrency. Finally, there was a budget deficit: Russia received less oil and gas revenues due to the redirection of export flows from Europe to Asia.
Rates and sanctions
The monetary policy of the European Central Bank and the US Federal Reserve also work not in favor of the ruble. Thus, the ECB rate increase by 50 bp on March 16 was one of the key factors that influenced the strengthening of the European currency. It is also supported by new Western anti-Russian restrictions.
– Before the introduction of the tenth package of sanctions by the European Union, there was a high probability of a correction of the euro against the ruble, but after the introduction of new measures, the chances for the weakening of the European currency from the level of 80.5 rubles have greatly decreased. In addition, paying attention to the past year, foreign exchange market participants are insured against geopolitical risks, which contribute to the growth of the value of the European currency, – points out financial expert of the Finmir marketplace Anton Kravtsov.
In February, the Ministry of Finance introduced an emergency measure to sell 80% of Russian companies’ export earnings, which should lead to a strengthening of the national currency, but, as the analyst notes, no effect has been observed so far.
What’s next
According to analysts, in the second quarter for the ruble will still be important decisions of central banks on interest rates. Ahead of the meeting of the ECB, the Fed and the Bank of Russia.
— The Bank of Russia, in our opinion, will keep the key rate at 7.5% until the end of the first half of the year. The strengthening of the dollar and the euro against the backdrop of higher interest rates in the US and the euro area is a negative factor for the ruble. It is still difficult to say how the decisions of the Central Bank of the Russian Federation on rates will affect, since the ruble often reacts unexpectedly to the decisions of the Central Bank of the Russian Federation, Natalya Milchakova, a leading analyst at Freedom Finance Global, points out.
A scheduled ministerial meeting of the OPEC+ member countries will take place in June. If the oil alliance decides to further cut production, the ruble could strengthen. However, according to Milchakova, most likely, the strengthening of the ruble can be expected only in June. For the second quarter, Freedom Finance Global forecasts an exchange rate of 73–79 rubles per dollar and 80–86 rubles per euro.
Much will depend on the further situation in the US banking sector and the ability of the authorities to stop the negative consequences of the growing financial crisis.
– If events in America continue to develop in the same direction and the government does not take measures to resolve the situation, then we will see a further decline in quotations for raw materials, which will put pressure on the ruble. If Brent oil prices do not fix above $76 per barrel, the rate may exceed 80 rubles per dollar, suggests Dmitry Fetisov, financial adviser, owner of the consulting company Financial Solutions.
According to his estimates, in the next quarter, the rate may be set in the range of 77-85 rubles per dollar. However, if the recession develops rapidly, it may drop even lower by the summer.
– The situation is very dangerous, if all this develops into a full-fledged recession, it will hit the cost of energy resources hard, and as a result, it will affect the value of the ruble. It is likely that these risks may manifest themselves not earlier than the end of autumn,” agrees Artem Zvezdin.
The geopolitical situation will remain the determining factor: it will be tense in the second quarter. Fuel to the fire, according to observers, will add fuel to the May meeting of the “big seven” (G7) in Japan.
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