What ruble exchange rate is useful for different sectors of the Russian economy?

Which rate banks consider “good”

The banking sector is not so dependent on fluctuations in the Russian currency as it is more focused on operations within the country. According to analysts of credit institutions, the exchange rate of 70-80 rubles per dollar will be the most beneficial for the Russian economy.

“Since the end of February, due to the sanctions, Russian companies have faced serious difficulties in supplying products abroad and importing from abroad. In such cases, the value of the currency must fall to support the producer.

The optimal exchange rate for most sectors of our economy is 80 rubles and less per dollar.”

– explained the chief economist of Alfa-Bank Natalia Orlova.

Sovcombank chief analyst Mikhail Vasiliev noted that under the conditions of Western sanctions, the Russian economy needs a freely floating ruble exchange rate. It allows for the softening of external economic shocks, the adaptation of the economy to changing conditions, and the balancing of the interests of exporters and importers.

“The Ministry of Finance and most large Russian companies have included in their budgets the exchange rate of the ruble against the dollar at 70+ levels for this and subsequent years. This stick is the best fit,” he said.

Geldy Soyunov, head of Zenit Bank’s structured products division, described the rate of 75 rubles per dollar as “good”.

“This bar roughly corresponds to the rate specified in the 2023 budget – 73.8 rubles per dollar. It ensures that the budget is filled with the revenues of export-oriented companies. On the other hand, it allows you to avoid the additional costs that may arise with a strong devaluation of the Russian currency,” he explained.

Strong ruble is bad for oil and gas

Roman Chechushkov, head of investment analytics at Renaissance Credit Bank, also considers the corridor of 70-80 rubles per dollar to be the most acceptable for key sectors of Russian exports. According to him, excessive strengthening of the Russian currency will reduce the volume of revenues of oil and gas companies to the Russian budget.

“According to the Ministry of Finance, in April 2022 the share of oil and gas revenues in the federal budget reached 47.7 percent. At the same time, the share of exports in oil and gas condensate production in 2021 was 43.9%.

The strengthening of the ruble reduces the revenue from oil exports in rubles. As a result, budget revenues are falling. This negatively affects the volume of social payments and the solvency of the population.

He added that the strengthening of the ruble could have a positive impact on importers and companies whose costs and financial liabilities are mostly represented in foreign currency. Such industries include the consumer sector and telecommunications.

“However, the over-strengthening of the ruble could ultimately have a negative impact even on these sectors. During the growth of the national currency, exporters suffer, especially in the commodities sector. But the negative impact is transmitted throughout the chain and industries that serve commodity exporters. For example, the transport industry and banks,” Chechushkov summarized.

Retailer valuation

The Chairman of the Council of Shopping Centers of Russia Dmitry Moskalenko, in an interview with socialbites.ca, did not disclose the specific ranges of the “good” ruble exchange rate. But he stressed that most sectors of the economy benefit from the market, not the “manual” rate.

“Many retailers are forced to buy their goods in currencies such as dollars, euros and yuan. It is important for them to be in market conditions. For example, companies that sell clothes sew and buy six months before the sale starts. Organizations must understand that they will sell it at market price,” explained Moskalenko.

Realtors’ opinion

Dmitry Tomilin, CEO of Eterna, a real estate management specialist, highlighted the detrimental effect of the excessively fluctuating ruble on most sectors of the Russian economy, including the real estate sector.

“The main thing is that in no case should there be a “swing” in which the ruble exchange rate can fluctuate around 50-140 rubles per dollar. No one needs jumps of 2.5 times or more in a short time.

Therefore, a currency corridor of 60-80 rubles per US currency would be optimal. An excessively strong exchange rate in the region of 40-50 rubles per dollar is detrimental to the macroeconomics. Everyone understands this – from dressers to catering reps, ”

Recorded by Tomilin. He added that a very weak ruble exchange rate would also have a negative impact on most parts of the Russian economy.

“The exchange rate of 80-90 rubles per dollar is unfavorable. 90% of the population of Russia earns in the mass of rubles. They do not have any salary index. As a result, with a weak ruble, purchasing power will decrease. Therefore, the ruble level, which was before the start of special military operations in Ukraine in the region of 70 rubles per dollar, will now be the most accommodating option.

What do the industrialists think?

For exporting businesses, the depreciation of the ruble means an increase in company revenue. But for businesses focused on the domestic market, the depreciation of the Russian currency will directly lead to an increase in the prices of imported goods. Andrey Khrapov, vice-president of the Association of Metalworking Enterprises, said that therefore it is necessary to look for the “golden mean”.

“Direct imports are bought at the exchange rate and are fully displayed in the shop windows. The rest of the goods will increase in price, but with a delay: imported equipment, imported raw materials and technologies are used for the production of domestic goods. According to the results of a survey of Russian metalworking enterprises, the optimal exchange rate is 70 rubles per dollar. Both for the purchase and sale of equipment and other services,” said Khrapov.