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Saturday, March 17, 2018

CBA to ruin the ruble is not going

On Tuesday, media reported about a sharp change of policy of the Bank of Russia, which allegedly began to publish a RUB and throw them on the market. Namely: attraction of means of banks on deposits, the Central Bank moved to the active loans of the banking system. Conclusion suitable: the Russian currency will soon collapse.

photo: Natalia Muslinkina

Alas, speculators betting on the collapse of the ruble, it is too early to rejoice. The analysis shows that no change of course is not even smell.

If you look at the situation objectively, in principle, we do not observe in the actions of the Bank of Russia is nothing extraordinary. The Central Bank regularly changes the volumes of cash — both rouble, and currency — which it provides market or, on the contrary, takes with him. So, usually at the end of each month, banks and their clients need in rubles for the implementation of tax payments to the budget — and, accordingly, the Central Bank increases lending to the banking system in rubles. And this is logical: such a policy allows to avoid sharp swings in the market — for example, short term rises in interest rates or currency fluctuations. If you look at the statistics of such operations, the Central Bank this year — she consistently fits this model of behavior is nothing new, we do not observe.

About the same things and to provide banks with currency. Now just place the meeting of the Federal open market Committee of the Federal reserve system of the United States, tomorrow will be announced a decision on the level of interest rates in the us economy. If the key fed rate will be raised, this will lead to higher demand for dollars. Many market participants are betting on such a scenario and buy dollars now. Accordingly, the Russian Central Bank needs to take measures to prevent sharp fluctuations of the ruble against the dollar due to short-term increase in demand for “green”. For this you need to expand the limits of the provision of foreign currency loans to Russian banks.

In other words, the Central Bank now does what it should do — assessing the current needs of the market and ensures the availability on the market offers this amount of ruble or foreign currency, which allows to avoid unreasonable fluctuations. And the market understands this. The best proof of the absolute lack of reaction of the foreign exchange market on the decisions of the Central Bank for changing the limits of Bank lending in rubles and foreign currency; the ruble is calm like a boa constrictor. Furthermore, operations of the Central Bank to provide monetary funds to the banking system are by definition short-term in nature and cannot affect the exchange rate of the Russian currency in the long term.

All told, however, does not mean that the Russian currency a bright future. The economic crisis in our country has not been canceled yet and the weak economy means the instability of the national currency — it is an axiom. The oil market is also regular surprises, and the decline in energy prices, as practice shows the last two years, almost automatically leads to a depreciation of the ruble. And the increase in US interest rates the ruble is also not good. These are all factors that a reasonable investor needs to consider when choosing what currency to keep savings.

Another thing is that all this has no relation to the last decisions of the Russian Central Bank. And those who will be guided when making decisions about buying and selling currency on all sorts of rumours and not on objective market trends, risk a lot to lose. Be careful — don’t fall for the speculation!

Review of the press service of the Bank of Russia:

“Auction repo 20 Sep due to an expected outflow of liquidity in connection with carrying out of tax payments at the end of the month, and increases in banks’ demand for liquidity as a result of increasing norms of required reserves for all liabilities of banks by 0.75 percentage points the overall influence of the situation with ruble liquidity on the foreign exchange market is extremely limited. Banks generally try not to take on currency risk even in the case of excess liquidity, and a large part of their operations in the foreign exchange market connected with the operations of their customers.”

The fall of the ruble. Chronicle of events

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