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During the New Year holidays, the Moscow Stock Exchange will trade on the foreign exchange market from January 3 to January 5. According to the forecast of Sovcombank chief analyst Mikhail Vasiliev, the dollar will cost during the holidays 88-92 rubles, the euro 96-101 rubles, and the yuan 12.2-12.8 rubles. [Citation: Sovcombank analyst Mikhail Vasiliev]

“Many financial market participants will not be present in the foreign exchange market from January 3 to January 5. The market will therefore be weak and prone to sharp fluctuations in both directions, including speculative moves,” the analyst explained. [Citation: Sovcombank analyst Mikhail Vasiliev]

Doctor of Economic Sciences, Professor of the Department of State and Municipal Administration at the Financial University under the Government of the Russian Federation, Yuri Shedko, does not expect drastic changes in dollar and euro rates during the New Year holidays. [Citation: Yuri Shedko]

“Like the rest of the world, Russia aims to greet the New Year without tremors and unrest. Russians should avoid buying dollars and euros for speculative reasons during the holidays. The economist noted there will be a wide gap between buying and selling prices for foreign currencies.” [Citation: Yuri Shedko]

January June

From January 9, key market players will return to the financial arena, and the ruble’s trajectory will hinge on fundamental factors. Vasiliev foresees a modest strengthening of the ruble in the first quarter of the year. [Citation: Mikhail Vasiliev]

“January through March are traditionally favorable for the ruble due to balance-of-payments seasonality. Early in the year, business activity slows during the long holidays. FX demand for imports, international travel, and foreign debt payments declines in January. Additionally, budget spending may drop,” he explained. [Citation: Mikhail Vasiliev]

Vasiliev also believes dollar and euro supply in Russia will stay elevated because large exporters are required to convert earnings. He noted oil prices are likely to hold near current levels during the winter, with North Sea Brent hovering around the $77 mark. [Citation: Mikhail Vasiliev]

Beginning in 2024, the Central Bank of Russia might expand yuan sales within the scope of budget operations. [Citation: Mikhail Vasiliev]

“In January, yuan sales could rise from the current 0.8 billion rubles per day to 4-5 billion rubles daily. This factor would support the ruble. High ruble interest rates would also aid the currency,” Vasiliev stated. [Citation: Mikhail Vasiliev]

Since December 18, the key rate set by the Bank of Russia rose to 16%. Following the central bank, banks have lifted deposit and loan rates. Higher credit rates can dampen consumer and investment demand, including imports, and a rise in ruble deposit rates tends to boost demand for ruble-denominated assets, strengthening the ruble. [Citation: Bank of Russia]

“Citizens are shifting from immediate consumption to savings, with deposits in the 15-17 percent range becoming more common. The dollar may rise as demand for foreign currency remains subdued in the first quarter, with estimates around 85 rubles; the euro near 93 rubles, and the yuan around 11.9 rubles,” Vasiliev remarked. [Citation: Mikhail Vasiliev]

Digital Broker analyst Natalia Pyryeva foresees the dollar at 90-95 rubles and the euro at 99-103 rubles in the first quarter. The guidance is to consider buying foreign currency when it becomes cheaper, particularly in the first four months of the year. [Citation: Natalia Pyryeva]

Vasiliev warned of a potential risk for the ruble could be the suspension of the compulsory sale of foreign earnings by the largest exporters, anticipated in mid-April. That move might curb money supply in the market and push the ruble lower. [Citation: Mikhail Vasiliev]

The following month, May, typically sees higher demand for foreign currency due to travel to destinations such as Turkey. As demand for dollars and euros rises, their rates tend to increase. [Citation: Mikhail Vasiliev]

By mid-2024, Vasiliev projects the dollar at 95 rubles, the euro at 104 rubles, and the yuan at 13.2 rubles. [Citation: Mikhail Vasiliev]

GV Perepelitsa, Candidate of Economic Sciences at the Russian University of Economics and Associate Professor of the Department of Global Financial Markets and Fintech, suggested that if current trends persist, the dollar could weaken slightly in June to around 95 rubles. He also noted that in a global recession, the dollar could jump to around 110 rubles, while the ruble would rise in June. [Citation: Denis Perepelitsa]

July – December

The second half of the year tends to be less favorable for commodity prices. Vasiliev predicts a slowdown in the global economy in 2024 due to high interest rates in the United States and Europe. Analysts expect Brent oil to ease from about $85 per barrel at the start of 2024 to around $75 by year end. He also anticipates the Bank’s rate-cut cycle reaching roughly 12 percent by late 2024. Ruble rates on deposits and loans would likely decline, while geopolitical and sanctions risks cannot be ignored. [Citation: Mikhail Vasiliev]

All of this could contribute to a weaker ruble. Vasiliev believes the ruble’s average rate in 2024 will be less volatile than in 2022 and 2023, with the dollar around 85-100 rubles, the euro 93-109 rubles, and the yuan 11.9-13.7 rubles. [Citation: Mikhail Vasiliev]

BCS Forex analyst Anatoly Trifonov added that the average dollar rate in 2024 could be about 86.6 rubles, slightly below 2023 levels. [Citation: Anatoly Trifonov]

Should the dollar repeatedly push above the 100 ruble mark, policymakers may impose new capital controls, dividend and loan restrictions, and limits on foreign currency withdrawals. Vasiliev noted the potential for further measures, including higher key rates and yuan sales from reserves, alongside restrictions on buybacks by Russian companies abroad and slower growth. [Citation: Mikhail Vasiliev]

He also indicated that the export controls and sanctions environment could prompt foreign firms to retreat from Russia. [Citation: Mikhail Vasiliev]