The ruble has shown its strength, but how long will it last, hard to say. Analysts told the “EV”, what factors will affect exchange rates and how much it will cost the Russian currency after the elections to the state Duma.
photo: Gennady Cherkasov
Last August the Russian ruble showed the fighting qualities and was able to overcome the curse of the last years when this month he was always in a losing position in relation to world currencies. Now the dollar is on a mark of 65 rubles, and this figure became the national currency of the enchanted.
The players are afraid to push the ruble higher out of fear that authorities will take action to weaken, although the regulator has repeatedly demonstrated its commitment to the free exchange rate. Much lower ruble also not going for a number of reasons. This is a stable oil, and the soft policy of the fed, and signs of détente in the relations between Russia and the West.
Concerning the further dynamics of the ruble, we can say that it will still mainly depend on oil prices. As volatility in the oil market remains high, any more or less significant drawdown in oil can lead to sharp exchange rate fluctuations.
In September, the pressure on the ruble may be further amplified due to the fact that Russian companies have to repay more than $10 billion on foreign payments. “By the end of the fall, we expect the market value of the ruble approximately at current levels — 63-65 per dollar and 72 to 74 euros. On the exchange rate in addition to the situation in the commodities market is influenced by such factors as the General situation in the economy, geopolitics, monetary policy, the periodic demand for the currency/RUR (periods of tax payments, holiday periods, etc.)”, — says Stanislav Novikov, the Deputy Chairman of the Board of FG BKS of retail business.
Agrees with him and analyst UK “the alpha-the Capital” Denis Asanov. According to him, over the next three months we will see a rise in volatility of the ruble, but not much drama to be expected: the ruble will fluctuate in the range of 63 to 67 rubles. First, against the ruble will play a potential solution fed to raise rates before the end of this year, which is now valued by the market at 55.4%. A significant impact on the decision of the monetary authorities, States can provide weak statistics on the labor market, for example, deterioration of the data on the number of jobs created in non-agricultural sectors of the economy. “Second, not less important factors are oil prices, which are now particularly vulnerable to authorities of producing countries, but their influence is fading. Freezing in oil production real support for the market will not have as major players in the oil market continue to update the highs of production”, — said Asanov.
In September there should be a meeting of countries from the OPEC cartel that could negotiate a freeze in oil production, but agreement among the major players there. Russia and Saudi Arabia to produce record amounts of oil production, Iran is fighting for market share, and many countries have already adapted to those realities which are given low prices, and carry out reforms. In other words, the high price of oil has ceased to be the stumbling block around which was a hot debate some time ago. Moreover, for many commodity-dependent countries it is time to carry out reforms to improve the economy, such examples are with the plight of the economy, as in Venezuela among OPEC a little, says analyst Amarkets Artem Deev. So strong incentives to freeze production no. Under these conditions, the oil is loose in the range of 40-50 dollars per barrel and can not break through the corridor in any one or in the other direction.
“We believe it is a high risk that by the end of the year, the dollar should strengthen to 70-72 rubles. First, on the background of the fed rate hike (we expect at least one promotion, as a maximum in December). Second, in light of the fact that the current price of oil in rubles (not even reaching 3000 RUB) is absolutely insufficient for the release of the Federal budget deficit of 2-3% of GDP”, — said the analyst of the company “Raiffeisen Capital” Sofia Kirsanova. Even if we consider the proposed ways of cutting costs (the abolition of indexation of pensions), and sources of additional revenues (taxes on oil and gas companies), still the price of oil should be close at least to 3200, which means the dollar is equal to 70 at the current price of oil.
In September, however, fluctuations in the exchange rate will not be as significant — in the hallway 64-67 RUB/$. Because the ruble exchange rate now is stable, it becomes easier to plan policies for investment. Novikov suggests to pay attention to geopolitics — in the case of a process for the removal of sanctions, the ruble may strengthen to 10% ceteris paribus. This is an additional factor which is very difficult to predict, but be sure to keep in mind.
Asanov believes that the greatest risk for the ruble carries the OFZ market. The growing budget deficit due to debt capacity, that is, placing OFZ, together with declining yields OFZ will lead to the fact that the demand for government bonds will not be able to cover the new offer. “And this is will lead to higher yields and a certain weakening of the ruble due to the departure of foreign investors using a strategy of Carry-trade. Additional pressure on the OFZ market will provide CB policy, which is unlikely to lower its key interest rate much below 10%,” — said the expert. He advises to buy local high quality corporate bonds. On the market minimal share of foreign investors and more attractive yield than the market for government securities.
Kirsanov recommends investors to prefer conservative strategies, equally distributing funds between foreign currency and ruble-denominated instruments — cash, bonds. Of course, the predictability of the ruble is an important factor when investing. Now we see that this stability along with the gradual decline of inflation led to the fact that interest rates on ruble deposits fell to pre-crisis levels. If this trend continues, then investors will continue to search for instruments that will yield more than deposits, returns at comparable risk. The dollar Deposit interest rates low, but there is opportunity for growth due to the strength of the American currency. If the fed will raise the rate to the end of the year, we will be able to see the stage of strengthening of the dollar, and so good feeling this year.
The purchase of currency, as well as sales, should be the goal. For example, you want to protect yourself from the consequences of sharp currency fluctuations. Then you need to intelligently allocate savings between currencies. At least 60% should be kept in the currency in which you mostly spend, that is in roubles. The remaining 40% should also be shifted to US dollars.
In the new business season on the dynamics of the ruble could have and geopolitics — the development of the situation in Syria, where the US and Russia might have a chance to negotiate. Much will depend on the new American President. Clinton is showing a more hostile rhetoric towards Russia than trump, and in the case of the arrival of a democratic candidate to power the ruble will wait for a severe test. But the coming of Republicans to power may be fraught with surprises. Therefore, the best support for the ruble would be to restore the Russian economy, which has been far too slow.