The Ministry of Economic Development announced that the ruble has reached its peak of strength. Writer RBC. “According to our estimations, the strength of the ruble is now at peak levels. Imports, capital flows will adapt to the new conditions. An important role in these processes should be played by the further lowering of the key interest rate by the Central Bank of Russia,” he said.
But on Monday evening, May 23, the ruble continued to strengthen: by 18:53 Moscow time, the dollar lost 2.5 rubles on the Moscow Stock Exchange to 57.6 rubles. The euro fell by 2.8 rubles to 59.9 rubles.
Financial holding “BCS World of Investments” agreed with the opinion of the Ministry of Economic Development.
“Although there is another tax period when exporters usually have the highest foreign exchange sales, most likely, the strengthening of the ruble has reached its market cap in the current situation,” said expert Dmitry Babin. Stock market at BCS Mir Investments.
Why did the ruble rise?
According to economist Tatyana Kulikova, the Russian market received a lot of foreign currency earnings from exporters, which were exchanged for rubles, which led to the strengthening of the national currency.
“Gazprom’s income came in foreign currency – it needs to be exchanged for rubles. Imports, on the contrary, collapsed catastrophically (according to the FCS, reaching pandemic year 2020 levels, the agency did not give exact figures – socialbites.ca). In addition, there is no longer a budget rule that will limit the strengthening of the ruble, ”the Kulikova emphasized.
In addition to the collapse in imports, Anton Tabakh, chief economist of the Expert RA rating agency, listed other factors for the strengthening of the ruble – the forced sale of 80% of foreign currency earnings by exporters and high deposit rates. The Ministry of Finance lowered this standard to 50% on Monday, May 23.
According to Sergey Grishunin, director general of the rating service of the National Rating Agency, the latest decision of the Ministry of Finance may stop the strengthening of the ruble, but the Russian currency will not weaken too much.
Will the ruble continue to strengthen?
According to financiers, the ruble will strengthen until the next key rate meeting of the Central Bank. It will take place on June 10.
“In the case of a sharp rise in commodity prices (in the absence of the embargo) and lower imports, the Russian currency may become stronger. The absence of corrective actions by the Central Bank (which is unlikely) could lead to a further strengthening of the ruble,” said Tabakh.
According to Grishunin’s forecasts, the ruble may strengthen to 52-55 rubles per dollar in the next two weeks.
Will the mark of 50 rubles per dollar pass?
“Whether the dollar will cross the next psychological 50-rouble limit will depend on whether import and supply chains can be established in the near future. In fact, Russia is currently experiencing a foreign exchange surplus. There is a currency, but with it much less goods are bought abroad than before. “In such a case, the ruble will inevitably appreciate,” said Aram Nalbandyan, ANIF Mutual Fund’s Deputy Head of Economic Analysis.
According to him, such well unprofitable because the treasury loses its revenue from exports.
“However, only the stabilization of the import-export balance can radically change the situation. Some measures are taken in this regard. For example, parallel imports where they make big bets are allowed. There is a reorientation of supply chains. Until the geopolitical situation stabilizes, it is not possible to reliably calculate exactly how long this will take. The exchange rate of the Russian currency will now depend heavily on geopolitics. “Most likely, the ruble will continue to strengthen in the near future, as supply chain restructuring takes time.”
Economists have not even ruled out that the Central Bank may unplannedly lower interest rates to contain the strengthening of the ruble.
“We are less than three weeks away from the Central Bank meeting. But if the ruble continues to strengthen sharply, the Central Bank may make an “extraordinary” key rate cut, as on April 8, he said.
Source: Gazeta
Barbara Dickson is a seasoned writer for “Social Bites”. She keeps readers informed on the latest news and trends, providing in-depth coverage and analysis on a variety of topics.