The depreciation of the ruble is due to foreign trade dynamics and low current account performance in the first quarter of 2023. Elvira Nabiullina, head of the Central Bank of the Russian Federation, announced this at the Financial Congress of the Central Bank of Russia.
“First of all, we need to look at the dynamics of foreign trade. It largely determines the movement of the track,” he said.
According to Nabiullina, the positive account of operations in the first quarter of the year was five times less than the peak values in 2022.
The dynamics of the exchange rate are now characterized by inflation risks, and the Central Bank plans to take this factor into account when deciding on the key rate. Inflationary shocks occur more frequently in the country than in other countries – but “regulatory confidence is growing – this is reflected in the dynamics of lending,” said the head of the Russian Central Bank.
According to him, the monetary policy regime of the Central Bank “shows its effectiveness both in calm periods and in periods of acute shock, and in the period of structural transformation that we are currently experiencing.”
On the morning of Thursday, July 6, the dollar rate rose above 93 rubles in the Moscow Stock Exchange, the euro rate crossed the psychological limit of 100 rubles and reached the level of 102 rubles. The dollar and the euro have reached these levels for the first time since March 2022.
According to Interfax, citing Vladislav Silaev, senior trader of Alfa Capital Management Company, “all fundamental factors” are helping to lose ruble positions.
“From the July budget deficit estimates to the Ministry of Finance’s decision to sell fewer yuan than before in the new reporting period. The Central Bank once again states that there are no financial risks for the economy. Against such a background, technical signals almost do not work. At the same time, the US dollar looks overbought and needs a serious correction,” he said.
According to Promsvyazbank chief analyst Yegor Zhilnikov, major players continue to support the demand for foreign currency in the Russian market. This can be indirectly confirmed by the increase in the average trading volume in the market.
“We attribute the effect partly to strong demand from importers in Russia and partly to the overcoming of key resistance levels of around 90 rubles per dollar amid ongoing geopolitical concerns,” Zhilnikov said.
The expert also acknowledged that one-off factors – large transactions, for example – can weaken the ruble. “Yesterday, the Federation Council approved the trading of non-resident banks, which will likely be a factor in supporting the currency,” the financier summarized.
The head of Sberbank German Gref emphasized that the ruble should strengthen and that extreme low levels are not expected in 2022.
“I don’t think the exchange rate is optimal at the moment, I still think it should strengthen, but of course it won’t go to the extreme lows of last year,” Gref said.
He also said that Sberbank’s macro forecast includes the ruble exchange rate of 75-78 rubles at the end of the year. The bank hasn’t changed it yet.
“Now that volatility has recovered, all sectors of the economy will adjust to the new realities and some new stabilization will come,” Gref added.
Press Secretary of the President of the Russian Federation Dmitry Peskov said that fluctuations in exchange rates can be attributed to speculation in the market.
“Indeed, we all see these kinds of fluctuations. The exchange rate rises, the ruble falls. But we’ve seen this a few times before. There were rebounds. As a rule, we know that there are significant speculative plays in such increases that cannot be ignored even now,” the Kremlin spokesperson said.
she loved Macroeconomic indicators in Russia are “better than expected”. “Among other things, this was discussed at a recent meeting between the president and the prime minister. “There is no question mark about macroeconomic stability,” Peskov said.