The initial reaction of the markets to the US elections was natural; The passing of political uncertainty sharply strengthened the American currency and the dollar rose, according to indicators of the derivatives market 98.2 rubles. BCS World of Investments stock exchange expert Alexander Shepelev told socialbites.ca about this.
“Also, the DXY dollar index increased to 105 points So the dollar is strengthening against the euro, yuan, yen and other currencies It puts pressure on commodity prices, which is negative for the ruble. Locally, the dollar could still rise to 98.5 rubles, but tomorrow there will be a meeting of the US Federal Reserve System, after which interest rates will be reduced by 25 basis points with almost 100% probability. This will lower the US currency index, which will remove some of the pressure from other currencies and commodity prices. afterwards The ruble will probably be able to recoup some of the losses and return the dollar to 96-97 rubles“, Shepelev remarked.
Mikhail Vasiliev, chief analyst of Sovcombank, admitted in a conversation with socialbites.ca: Trump’s victory in the US elections will provide moderate support to the dollar/ruble exchange rate.
“On the one hand, Trump’s victory leads to a stronger dollar in the global market. On the other hand, Trump will probably follow a more protectionist policy; The US’s trade wars with China and possibly Europe will escalate. All else being equal, this means lower global economic growth and higher global inflation (higher costs due to import duties, tariffs and protectionism). Lower global economic growth means lower prices for raw materials, including Russian oil, gas and metals. The lower the foreign exchange earnings from exports, the weaker the ruble“, explained the analyst.
According to his forecast, the ruble may weaken faster against the dollar and slower against the yuan and euro in the coming weeks.
Vasiliev added that exporters generally reduce the foreign exchange supply in the market at the beginning of the month, which puts pressure on the ruble. In addition, negative factors for the ruble include low oil prices and the easing of conditions for the compulsory sale of foreign currency earnings by exporters.
The analyst emphasized that the ruble’s trade balance surplus will be supported by the increase in ruble interest rates after the sale of yuan from reserves within the scope of budget operations amounted to 4.2 billion rubles per day and the Central Bank increased the interest rate to 21%. .
Alina Dzhus/socialbites.ca
According to Vasiliev, the dollar will cost by the end of the year 96-101 rubleseuro – 103-109 rubles, yuan – 13.4-14.1 rubles. According to Shepelev, the American currency may move in November-December 95-99 rubles. However, Shepelev added that this level is unlikely to be lower, given the deterioration in the foreign trade account and the intensification of seasonal demand for imports at the end of the year. Dollar will be traded in the short term 97.5-102 rublesHe was accepted as Associate Professor at the Pyotr Shcherbachenko Financial University under the Government of the Russian Federation.
“The dollar’s position in the coming quarters will be stronger than the euro or yuan. Trump’s arrival will strengthen the world’s tendency to move away from globalization and divide into geopolitical blocs. This increases uncertainty in the global financial system, so global investors will prefer a more defensive dollar. Moreover, interest rates in the dollar are higher than in the euro or yuan,” says Emin Vasiliev.
Should I buy dollars?
According to Vasiliev, the dollar (and euro) remain “toxic” currencies for Russians due to sanctions. Therefore, every Russian must independently make the decision to invest in dollars, understanding these sanctions and infrastructure risks. According to the analyst, cash dollars may be suitable for those traveling abroad for tourism or business purposes.
Shcherbachenko urged Russians to consider the following factors before investing in dollars:
*The suspension of trading in currency pairs with the dollar and euro on the Moscow Stock Exchange has led to a fourfold increase in the volatility of the ruble since July 12.
*Political risks: Unfriendly countries may impose sanctions and freeze assets.
*Restrictions on withdrawals from accounts. Up to 10 thousand dollars can be withdrawn from deposits opened before March 9, 2022. Other withdrawals are possible only in rubles at the current exchange rate.
*Low rates of 1-3% on deposits in dollars and euros.
*Stocking cash in dollars and euros is always a compromise between risk and potential reward.
Candidate of Economic Sciences at the Financial University of the Government of the Russian Federation, Associate Professor of the Department of Public Finance Igor Balynin does not recommend that Russians buy dollars.
“The dollar has already shown its unreliability. Let’s see: In exactly one year (from November 6, 2023 to November 6, 2024), the price of the dollar increased by only five rubles (that is, 5.4%). There may also be additional fees for executing foreign exchange transactions, and even a 5% return may not be possible. When September 2024 and September 2023 data are compared, inflation is 8.63%. So investing in dollars does not even allow you to protect your money from inflation. At the same time, if a citizen had invested these funds in a ruble deposit a year ago, then in a year he could get a return of up to 16% (at that time these were offers on the market). So this offer is three times more profitable than settlement in US dollars,” Balynin explained.
According to him, money invested in US dollars no longer only brings income, but also loses value. Their purchasing power is decreasing.
Vasiliev noted that current high ruble interest rates (for example, about 20% per year on ruble deposits) adequately compensate for ruble risks. Therefore, it is more convenient for most Russians to save in rubles, Vasiliev summarized.
“If we are talking about foreign currency, it is preferable to choose an alternative in the form of a friendly yuanWhich can be purchased on the exchange and open a deposit or choose yuan bonds of Russian companies. In addition, since gold is priced in dollars, it can also provide an opportunity for currency diversification of the portfolio. A smart way to invest in gold at minimal cost is to buy gold on the Moscow Stock Exchange (GLDRUB_TOM),” Shepelev advised.
According to his assessment, it is most convenient to hold foreign currency and foreign exchange instruments for those who earn and spend mainly rubles. up to 30-40% saving.
Vasiliev expects a moderate weakening of the ruble in the coming quarters. According to him, By the end of 2025, the dollar will cost 106 rubles, the euro 116 rubles and the yuan 14.6 rubles. The analyst noted that the period of local strengthening of the ruble could be between the 25th and 28th of each month, when exporters actively sell foreign currency to pay taxes to the budget. Traditionally these dates can be more profitable to buy dollars if necessary.
What are you thinking?
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.