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Sunday, December 11, 2016

The fate of the ruble after the election: experts have called the marginal rate of the Russian currency


Despite the fact that several experts predicted the collapse of the national currency after the elections, this did not happen. We were scared of 80 rubles per dollar, and sometimes there was talk about 100 rubles for “green,” but that didn’t happen. Despite pessimistic forecasts, the national currency, on the contrary strengthened. So, on 19 September, the Euro fell to 72,44 rubles, and the dollar — to 64,91. However, maybe for the sharp decline of the “wood” too little time has passed and now we are seeing the calm before the storm? However, the majority of respondents “MK” experts of the collapse of the Russian currency at least until the end of the year will not happen. In the worst case, the “wood” is threatened by a drop to 71-72 rubles per dollar.


photo: Natalia Muslinkina

EXPERTS OF “MK”

Anna KOKOREVA, Director of the analytical Department of Alpari:

On Sunday in all regions of Russia held elections to the State Duma. Usually, a significant part of the Russians after any global referendum in the country is waiting for the economic Apocalypse, for example, the collapse of the currency, abolition of pensions, tax increases, etc. In the current situation, many are waiting for the collapse of the ruble.

However, the concerns of citizens in vain and premature. Looking at the charts of ruble pairs is not to say that the exchange rate were restrained and the ruble has long been have the desire to sink to the bottom of the market. The pair show a sideways movement since mid-April 2016, the rate has become more stable and less susceptible to the fluctuations of oil and other events. The ruble is not even reacted to the lowering of the key rates by the Central Bank and especially do not react to the results of the elections to the state Duma.

The fall of the Russian currency in the current environment may occur for three reasons: the fall in oil prices, the sharp appreciation of the dollar and geopolitics.

The price of a barrel of oil is now largely dependent on the behavior of key market players: Saudi Arabia, USA, Iran, Russia, Canada and Kuwait. As well as the decisions of OPEC and the Outlook for global energy agencies and ministries. As you know, at the last meeting of OPEC members failed to agree on measures to stabilize the level of oil prices, which did not allow Brent to jump above $51,5 per barrel. As a result, the quotations are moving sideways in anticipation of the new reasons for rise or fall.

At the moment the situation is quite neutral. There is no reason for growth to drop them is not enough. We anticipate that before the end of October, Brent will continue to trade in the range of $40-50 per barrel. And that means that the trading range habit is unlikely to change.

A sharp strengthening of the dollar could occur on the background of rising US interest rates. The next meeting of the Federal reserve system will take place on 21 September 2016. But most experts believe that the fed will keep policy easy, so the risk is postponed to the end of the year.

Regarding geopolitics, there are the upcoming presidential elections in the United States. From their results a lot in world politics, politics and the US economy can change and affect emerging markets. In particular, radical changes are expected in case of arrival on a post of the President of Donald trump.

With this in mind, we assume that the weakening of the ruble might occur traditionally in December, as against a possible rise in interest rates and elections in the United States, and against the background of payments on external debts. Accordingly, the pair dollar/ruble will shift into the range 66 to 69, the Euro/ruble – in the range of 75-78.

Mikhail BELYAEV, chief economist of the Institute of stock market and management:

“Elections will not affect the national currency. The authorities kept the same party. Even if the new composition of the Duma will understand that it is time for a new economic policy in the medium term (2-3 months) it will not affect the exchange rate. In other words, from a domestic point of view his position is not threatened. Now the rouble has found a stable position. In addition, we should not expect drastic changes in connection with the increase in oil prices. Even if the cost of black gold will rise, it is unlikely that it will exceed $55-60 per barrel. It is clear that the national currency is strengthened, because the high price of oil, our economy is functioning better. However, this is not a radical change, which could significantly affect the ruble. The fact is that during the time when the oil price was at a low level, the Russian economy has managed to adapt .Thus, the ruble is already not a fatal dependence on oil prices”.

Irina ROGOVA analyst GC Forex Club:

“70-71 rubles to the dollar by year-end is not excluded. But it will happen, provided that oil prices remain around $44-45 per barrel. It is possible that this will happen to bring the budget deficit to a planned 3%. However, on September 28 at an informal meeting of OPEC countries fail to agree on the freezing of oil production that will become a positive signal for the market. Moreover, Iran and Saudi Arabia now demonstrate a more constructive attitude. If against this background, the oil will be able to consolidate in the range of $50-55 a barrel, the dollar will be worth 62-64 of the ruble. However, at the end of III – beginning of IV quarter will be fairly many different significant events, including elections in the United States that also carries certain risks for oil and the ruble.”

Sergey PIKIN, Director of energy development Fund:

“For the market of hydrocarbons nothing new after the elections did not happen. The strategy for this segment of the economy when making decisions through the Duma, most likely, will remain the same. Do not expect any changes in connection with the upcoming next week’s meeting of OPEC in Algeria. It is expected that it will discuss limits of oil production. But I think it will be like this: meet, exchange information, but no actual agreements will not be signed. Definitely more the situation may depend on the influence of the dollar factor that will decide or not on this week, the U.S. Federal reserve to raise interest rates. In addition, the need to monitor the production volumes of the key players. While the dynamics of oil prices looks moderately neutral. Since the beginning of summer the “black gold” kept in the corridor of $40-50 per barrel. There was an attempt to break down, but defended. Therefore, the baseline scenario of the Federal budget for the next three years, in which the Ministry of economic development laid the average price of $40 per barrel, it looks quite correct. If the number is higher great. Part of the money will then be withdrawn into the stabilization Fund.”

Anastasia IGNATENKO, analyst at TeleTrade:

“Election is not the destabilizing factor that can change the existing trends in the foreign exchange market. They probably will be the fed policy meeting and data on stocks of oil and petroleum products, published on Wednesday. In addition, next week the international energy forum. In its framework will host a meeting of oil producing countries OPEC and regular talks on the freezing of production. Remembering the previous failure of the talks, investors do not expect positive scenario this time. However, there are also positive news. In particular, Iran has supported measures to stabilize the commodity market. But it is unlikely that the retention of the current quota will help the oil market show a marked increase. Therefore, in the medium term not ruled out the withdrawal of oil prices in district 35 to 37$ per barrel. And this in turn can cause the growth of the dollar up to 71-72 rubles.”

Sergei DUSHECHKIN, the company’s financial expert Analytics Online:

“No serious reaction of the ruble in the elections to the state Duma we will not see. In the new composition of the Duma, nothing has changed. Therefore, the change of policy especially is not expected. While the Central Bank and the Finance Ministry in a variety of ways “squeeze ruble liquidity, so as not to cause another jump in the price of goods and products within the country, serious fall of the ruble is not expected. In conditions of tight monetary policy of the Central Bank the last two years, and in the absence of external shocks, the ruble has all chances to strengthen, and not on a sharp decline, the population of which is expected by some experts.

Watching oil prices and the behavior of the ruble in the last six months, you notice that there is a direct dependence when oil is falling along with the wheel, almost lost. While Brent is trading above $40 per barrel, the reaction of the ruble on changes in prices of black gold will be minimal. Probably, the prices of the dollar has entered a phase of low volatility, which can take several years. Like we saw from 2000 to 2008 or from 2008 to 2014, when the dollar for a long time fluctuated around the level of 30 rubles. Special reason to this time it was different, almost none. Here only the value of the dollar now is very different. Meanwhile, in the near future, Algeria will be a meeting of the States oil producers aimed at addressing the issue of stabilization of oil prices in the long term. Most likely, at this meeting, serious agreements to restrict oil production achieved and never will. However, it’s possible we’ll hear about the intentions to reduce production. However, oil traders in the current market conditions even this will be enough to at least keep oil prices at current values, and prevent a possible drop below $40 a barrel.

Elections to the State Duma 2016. Chronicle of events
source

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