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Thursday, June 29, 2017

The shortage of currency in banks threatens the dollar increase to 95 rubles

The banking market is close to panic. There were rumors that the financial sector is experiencing a shortage of dollars. Moreover, the Bank allegedly put up for sale much less currency than requested banks. This trend experts call alarming. If it goes on, the growth rate of the “wood” will be difficult. But if the forecasts come true, the Western bankers that threaten to reduce the cost of a barrel next year to $25, the Russian currency going down. The dollar may bounce up to 90-95 rubles.

photo: Gennady Cherkasov

In may of this year, the head of the Bank of Russia Elvira Nabiullina with confidence said that the shortage of foreign currency liquidity at banks is missing. “We see that there is no shortage of foreign currency liquidity and the banks’ need in foreign currency, which had been provided by the Central Bank, declined quite sharply during the year,” she said.

Now there are some grounds to believe that the dollar shortage is still felt. Talking about this foreign players in the domestic banking market. With this view agrees and representatives of Russian financial institutions.

In this version it is possible to believe, given that, first, decreased foreign currency deposits of private individuals, and, secondly, the Central Bank does not satisfy the demand for currency from the banks at its auctions. According to some information, only on 3 October, the regulator has sold nearly $1 billion less than what was demanded by the buyers.

If things go at this pace, the deficit in the near future will increase. Moreover, the growth rate will also go up. According to the financial Ombudsman Pavel Medvedev, is pronounced a disturbing and negative trend. We can assume that dollars are now the most profitable tool of investing money. “To buy foreign currency do not force anyone to be banned. Ruble supply in the country in recent years significantly increased. Here the bankers and put it in foreign currency. And it is fraught with depreciation of the ruble,” — said Pavel Medvedev.

There are other factors that can affect exchange rate dynamics “wooden”. Despite the fact that the price of oil in recent days has exceeded $50 per barrel, this kind of thing risks being short-term. OPEC and other major producers of “black gold” failed to agree on production cuts, which could lead to a rollback of the price of a barrel back to $40.

And then below. According to the forecast of one of the largest U.S. banks, in 2017, oil will fall to $25. Then the dollar will rise to 90 rubles. The German bankers ‘ assumptions is even sadder. They believe that the cost of “green” is entrenched above 95 rubles.

However, to finally put an end to the Russian currency is not necessary. According to Pavel Medvedev,the Central Bank has sufficient mechanisms to not allow the dollar to excessively raise their position. “The regulator knows how much the banks has accumulated currency in order to avert catastrophic shortages. However, if these small steps will continue, we will sink into the abyss,” — says Medvedev.

The population is impoverished despite economic growth

Expert “MK” Anna Kokorev, Deputy Director of the analytical Department of Alpari:

– Ministry of economic development has published data on the growth/decline in GDP in 8 months of 2016. It turned out that during this time, the fall of the economy fell to 0.7% per annum. It’s a bit of a breakthrough. In the I half-year the decline was 0.9%. But the lives of ordinary Russians from such improvements, unfortunately, will not change.

The reduction in the rate of GDP decline, probably due to increased activity in the industrial sector and the service sector. Stabilization of the exchange rate and gradually decreasing the key interest rate are the main engines of this activity.

In annual terms, according to the Ministry of economic development in August 2016 has been stopped the decline in economic activity — GDP growth amounted to 0% year-on-year after a negative 0.8% in July.

However, according to the Ministry, the real incomes of the population of Russia has decreased to its best level in 7 years. The largest drop was recorded in August (-8,3%). In addition, in August decreased incomes in nominal terms (-0,9%).

This situation arises due to the fact that the official inflation rate has nothing to do with reality. Despite the strengthening of the ruble, prices of products and services did not fall, but instead continue to grow.

The decline of incomes resulted in the growth of consumer credit. Citizens were more likely to take the credit for consumer needs in connection with shortage of own funds. The growth of credit activity noted by the Bank of Russia. If the demand for borrowed funds will continue to grow, this may increase the burden on the banking sector.

The result is a situation in which the major macro economic indicators are improving, the economy is recovering, but the budget is broken, and the population is impoverished. Taking into account the proposals of the Ministry of Finance to increase the number of taxes and introduce a new richer our citizens obviously will not.

Rising prices and a falling ruble. Chronicle of events

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