According to the Moscow Stock Exchange, the cost of the dollar at 12:22 Moscow time is 87.8294 rubles. The euro exchange rate also fell during the auction. At its maximum, it fell to 96,036 rubles (minus 84 kopecks as of closure). As of 12:22 Moscow time, the euro costs 96,381 rubles.
Why did the dollar fall?
The ruble has been strengthening against the dollar, euro and yuan since October 11, when Russian President Vladimir Putin signed a decree reinstating mandatory sales of foreign currency earnings for Russia’s biggest exporters. Sovcombank chief analyst Mikhail Vasiliev called this measure the main factor currently supporting the ruble.
Candidate of Economic Sciences at the Russian University of Economics, Associate Professor of the Department of Global Financial Markets and Fintech, added that the tax period has begun and exporters are now selling more foreign exchange earnings than usual. GV Plekhanova Denis Perepelitsa. Russian companies must pay taxes on mineral extraction, value added, personal income and other wages by November 28.
“The oil market is slowly recovering (the price of one barrel of the North Sea benchmark Brent rose by 0.61% to $81.82 on Tuesday on the London ICE Exchange – socialbites.ca), which increases the volume of foreign exchange earnings. The economist said that another important factor is the control of capital outflow by the state and the close monitoring of the ruble exchange rate on the eve of the presidential elections.
Mikhail Zeltser, candidate of economic sciences, stock market expert at BCS World of Investments, added that the Central Bank of Russia increased the interest rate to 15 percent, which limited the demand for money. According to Vasiliev, this situation also caused deposit interest rates to increase. Higher deposit rates increase the attractiveness of ruble savings and increase demand for the ruble. The exchange rate traditionally rises when demand for a currency increases.
What will be the “bottom” of the dollar?
Vasiliev is confident that the ruble exchange rate may rise in November-December 2023 80-85 rubles per dollar, 88-93 rubles for euros and 11.2-11.9 rubles per yuan.
“The ruble will continue to be preferred due to the forced sale of foreign exchange earnings of the largest exporters, the current surplus of Russia’s balance of payments and high ruble interest rates. At the next meeting on December 15, the Central Bank will increase the key interest rate by another 100 basis points to 16% annually. We also assume that the increase could be 200 basis points, up to 17%. This will happen if inflation continues to rise in the remaining weeks before the meeting,” the analyst said.
According to Perepelitsa, the dollar exchange rate may decrease 85 ruble while maintaining current trends.
“The most comfortable rate for the Russian budget will be in the following range: 85 – 90 Rubles per dollar. Most likely, it will be like this in the next two to three months,” said Vladimir Zotov, chief operating officer of the UBRD treasury.
Zeltser believes that the limit of the dollar’s decline in December is as follows: 87 ruble Euro will not cost less 95 ruble, yuan – 12 He added that it was in rubles.
“Currencies are oversold and there could be a technical upside recovery from the indicated levels. “However, a new wave of devaluation in the ruble is not expected as the Central Bank’s tight interest policy and standards for exporters will continue for a long time, at least until April-June 2024,” he said.
According to Vasiliev, the ruble exchange rate may continue to strengthen in January-March 2024 due to low import demand and low currency demand.
Pavel Zhuravlev, head of investment analytics department at Renaissance Bank, said that the optimal strategy for Russians may be to extend the timing of foreign exchange purchases to November 28, that is, until the end of the tax payment period for Russian companies.
“Additional fluctuations in the dollar-ruble exchange rate may occur due to both tax payments, which move in favor of strengthening the national currency, and the traditional increase in public sector spending at the end of the year, which moves in favor of the national currency. “It’s getting weaker,” he explained.
If you buy foreign currency, you need to understand why, Zeltser said.
“You need to take into account your risks for speculation on the stock exchange and to replenish your “personal foreign exchange reserves” or spending on imported goods, tourism, a dollar cheaper than 90 rubles, of course, looks more interesting than the last abnormal 100+,” noted the expert.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.