According to the Moscow Stock Exchange, the price of the euro at 14:23 Moscow time on December 21 is 100,542 rubles, and the cost of the dollar is 92.0691 rubles.
Since the beginning of the week, the ruble exchange rate has weakened by 2 percent against the dollar and euro. As explained by Sovcombank chief analyst Mikhail Vasiliev, in recent years the price of the ruble has fallen by an average of 2% against the dollar in December. According to him, the increase in exchange rates at the end of the year is due to the seasonal increase in demand for the purchase of imported goods and foreign tourism.
“December is traditionally the largest budget expenditure of the year – as a result, the supply of rubles on the market increases. Some of it goes to buy imports, and some of it goes directly to buy foreign currency. Other negative factors are the acceleration of inflation and the fact that citizens and companies abroad continue to withdraw money. Withdrawal of capital is usually concentrated at the end of the year, when dividends and bonuses are paid,” Vasiliev said.
The fact that some Russians go on holiday abroad for the New Year holiday also causes the demand for foreign currency to increase in December.
“Finally, at the end of the year, some financial market participants may intensify their foreign exchange purchases to survive the long New Year holidays,” the expert said.
Private investor Fyodor Sidorov explained the rise in dollar and euro exchange rates with the sharp decline in foreign exchange earnings after the tax payment period for Russian exporters ends in November 2023, as well as the pressure created by low oil prices on the ruble. So, a standard barrel of North Sea Brent brand oil costs $ 79-80 on the London ICE exchange – this price is explained by the problems in transporting energy resources across the Red Sea after attacks on sea vessels by the Yemeni Houthis.
In contrast, BCS World of Investments stock market expert, Candidate of Economic Sciences Mikhail Zeltser, attributed the rise in euro and dollar exchange rates to speculation in the pre-holiday low liquidity environment in the Russian financial market. In other words, There is currently very little money circulation in the market due to the fact that the population tends to withdraw money in cash before the New Year holidays.. As a result, trade turnover decreases and speculators play with exchange rates.
“Also, speculative movements are a typical example of maturity days (completion of the circulation of derivative contracts on the stock exchange – futures and options – fulfillment of obligations under derivative contracts). The execution and dynamics of fixed-term contracts today may not be indicative in principle. So a purely technical business reason is also possible,” Zeltser noted.
When will the dollar and euro become cheaper?
Economist does not rule out a quick dollar comeback 90 ruble and euro – 98 ruble At the same time, Vasiliev believes that the dollar will appreciate by the end of the year 89-94 ruble, euro – 98-103 ruble
“Maybe the euro will reach 102 rubles, but there is a strong resistance level above it. BitRiver economist and communications director Andrei Loboda said that the price of the European currency could fall to around 96-98 rubles by the end of 2023.
Sidorov predicted that the euro would be 103 rubles and the dollar would be 98-99 rubles. The investor believes that there may not be a decrease in interest rates before the end of the New Year weekend.
Loboda advised Russians to buy foreign currency when rates fall and the euro will cost 96-97 rubles, and the dollar will cost 89-90 rubles.
“It is now possible to sell dollars and euros while their exchange rates are rising. It is better to wait for the downside correction to buy. However, investing in toxic currencies as stores of value still carries risks and is not recommended. For example, if you need to travel abroad for a holiday, you should purchase the most appropriate amount of currency for the trip,” Loboda explained.
What will strengthen the ruble?
According to Vasilyev, the Russian currency will continue to be supported by the presidential decree on the mandatory sale of foreign currency earnings of the largest exporters and the increase in the key interest rate.
The Central Bank will hold its last meeting of this year on December 15. raised The basic interest rate was increased by 100 basis points to 16% per annum. An increase in the interest rate causes an increase in the cost of credit, which reduces consumer and investment demand, including import demand, and the demand for foreign currency. Moreover, the increase in deposit interest rates and bond yields increases the attractiveness of ruble savings and the demand for the Russian currency, therefore the ruble exchange rate is increasing.
Next week the Russian currency will be supported in the December tax period.
“All exporters will sell their foreign exchange earnings in exchange for reconciliation with the budget. Russian companies must pay a number of taxes, such as mineral extraction tax, VAT, personal income tax and other taxes, by December 28,” Vasiliev concluded.