The ruble outlook for 2024: drivers, estimates, and risks
From January to April 2024 the ruble showed surprising strength as seasonal shifts reduced demand for the dollar and the euro and a scheduled sale of foreign exchange earnings by large exporters persisted through April 30. This assessment comes from Vasiliev, a financial analyst who shared insights with socialbites.ca.
Early in the year the ruble rose about 2 percent against major currencies. Energy prices were expected to stay at relatively high levels through the winter heating season, and the start of the year typically brings subdued business activity due to extended New Year holidays. Importers earned less money, residents had fewer dollars for foreign travel, and the state faced lower proceeds from foreign debt payments. Government spending often contracts at the beginning of the year as well. These conditions collectively supported the ruble, according to the analyst.
Another factor in favor of the ruble is the ongoing sale of yuan from the reserves as part of budget operations. Vasiliev notes that the Bank of Russia is projected to sell 7–9 billion rubles daily in yuan in the coming months, compared with about 0.8 billion rubles in December.
High ruble interest rates added support after the rate was raised to 16 percent in December. Banks and brokers recorded inflows into ruble deposits and ruble bonds at roughly 14–18 percent per year. As demand for the ruble grows, the exchange rate tends to rise.
Below is a candid view on where the dollar and euro might land by the end of the first quarter.
Vasiliev predicts the dollar could bottom near 85 rubles and the euro near 93 rubles in the first quarter. On average, the January–March period could see the dollar around 87 rubles and the euro around 96 rubles. Yuri Shedko, a Doctor of Economic Sciences and professor at the Financial University under the Government of the Russian Federation, believes the strengthening trend against the dollar and euro will persist into mid-2024 and that the 85 rubles for the dollar and 93 rubles for the euro mark the bottom. In technical terms, the upper bound for ruble strength against the dollar is seen around 83.5 rubles per dollar and 92.5 rubles per euro. If demand grows further, the ruble could push the dollar below 83.5 rubles. This view is shared by Denis Perepelitsa, who holds a senior role at the Russian University of Economics GV Plekhanova and advises on global financial markets and fintech. He notes the potential for further ruble strength should speculative activity rise.
Turning to risk, Vasiliev cautions that the period from May onward tends to bring less favorable conditions for the ruble due to seasonal factors. The mandatory sale of foreign exchange earnings after April 30 could be adjusted or canceled, and demand for foreign currency including tourism tends to rise in May. Under those scenarios, the ruble could reach around 95 rubles per dollar and 105 rubles per euro in the middle of the year. Geopolitical tensions, sanctions, soft budget policies, and inflationary pressures are listed as potential headwinds that could reinforce this risk. The possible removal of the mandatory sales regime is also a factor to watch and could alter the currency trajectory.
The second half of the year is expected to be modest for commodity prices. A slower global economy is anticipated due to high interest rates in the United States and Europe and ongoing geopolitical tensions. Forecasts include Brent crude averaging around 75 dollars per barrel by year-end, with a later-stage easing of the ruble’s rate, possibly lowering support for the currency to a 12 percent rate by year-end. The assessment suggests that if ruble interest rates decline, the ruble could lose some of its late-year momentum.
On currency holdings, Vasiliev recommends keeping part of savings in foreign currency as a hedge against ruble weakness. The idea is to consider exchanging high-quality corporate ruble bonds for dollars and euros, and diversifying with yuan and even gold. Perepelitsa advises buying dollars and euros when they reach price lows and only for foreign travel needs. He warns against opening deposits in these currencies since returns are modest and sanctions risk remains a consideration. He notes the state bears no liability for bank deposits in foreign currencies. A separate financial analyst, Anatoly Trifonov, emphasizes limiting foreign currency savings to a level that supports risk diversification in the face of potential sharp shifts in the exchange rate.
Overall, market participants stress that currency decisions should align with individual goals and risk tolerance. The interplay between seasonality, policy actions, and global financial conditions will continue to shape how the ruble moves through 2024, with attention to central bank policy, exchange rate dynamics, and external shocks that can alter trajectories at any moment.
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