Any decision regarding the key exchange rate should not significantly affect the ruble exchange rate. This is what Andrey Kochetkov, a leading analyst at Otkritie Investments, told socialbites.ca.
“The problem is that in the absence of external capital flows, the interest rate of the Central Bank of the Russian Federation has almost no effect on the ruble exchange rate. Essentially, there is private money in the foreign exchange market and there is no foreign exchange supply from exporters. Therefore, the rate factor in the ruble exchange rate does not play a significant role,” concluded Kochetkov.
According to the analyst, raising the interest rate will not make ruble instruments and deposits more attractive than they already are.
According to the analyst, the main factor in the strengthening of the ruble in October was the presidential decree on the mandatory sale of foreign currency by exporters. This caused an increase in the foreign exchange supply, which the market could not meet. Accordingly, the reference point of the November ruble exchange rate is largely the dynamics of oil prices and exporter sales.
“One of the official guidelines of this process is the president’s statement that the exchange rate should be kept around 90 per dollar. Accordingly, we expect the ruble exchange rate to be close to this value in November, with a deviation of 2-3 rubles in both directions,” summarizes the analyst.
The Central Bank will hold its regular board meeting this Friday and will make its decision on the key interest rate at this meeting. 9 out of 12 banks that participated in the survey of Izvestia newspaper last week respondentshttps://www.gazeta.ru/business/news/2023/10/21/21546847.shtml He said that they expect the Central Bank to increase the key interest rate to 14%. Expobank analysts alone set the target at 15%.
However, some financiers take into account such a scenario is “crazy”. According to Peter Arefiev, associate professor at the Department of Economic Theory at the Financial University of the Government of the Russian Federation, a further increase in the rate could “destroy” all jobs in the country. He believes that the optimal strategy for the Central Bank in this situation may be to keep interest rates at current levels until the summer of next year, followed by a cycle of reductions.
Previously First Deputy Chairman of the VTB Board of Directors compared The upcoming meeting of the Federal Reserve along with the Battle of Waterloo.