The ruble declined to do the Russians a Christmas gift. 29 December, the dollar reached the mark of 70, and the Euro even overcome the psychological bar 80. In the afternoon, the Central Bank of Russia set the exchange rate, which does not change during all the Christmas holidays. To 9 January, the dollar is fixed at 69,47 rubles, and the Euro — 79,46. However, the stock exchange begins trading on January 3, so the first working day of the year the Russians can meet a much lower rate.
Most experts agree that after the holidays the ruble will weaken, continuing the trend of the year. In 2018, the Russian national currency depreciated against the dollar by 17.5% and the Euro by 6.8%. Not added strength of the ruble and oil prices, which finished the year with a drop of 21.6% compared to last year.
When you consider that in the new year the authorities predict inflation at 5.5% (consumer inflation may exceed 8%), combined with a weak ruble would hurt the welfare of the population. Even though the “unprecedented growth of wages”, mainly in the public sector in the pre-election period in January-November real disposable incomes fell 0.1% in annual terms.
In 2019 this growth of salaries will not. It has recognised Sberbank, has predicted an increase of 2.5% compared with 7.5% in 2018. Thus, high inflation, weak wage growth, the VAT increase of 2% and a weak ruble will lead to the fact that the Russian population will become poorer.
However, some analysts predict that by the end of the first quarter, oil prices, and the ruble will go up. But, as suggested by the Professor of the Department “Finance, monetary circulation and credit” of the faculty of Finance and banking, Ranepa Yury Yudenkov, the national currency is much less impact on welfare than the tax maneuvers and other steps of the authorities.
— The current rate is 69 rubles — this is the bar with which we enter into the beginning of January. The dollar will fluctuate around 69 rubles, and there is a high probability that by the spring he breaks 70. I think we will see a trend on the depreciation of the ruble, which during the year will only increase.
If it will be accepted extraordinary measures by Congress and the US administration to block Russian accounts and banks, the course may even more change for the worse. Let me remind you that the Congress threatened to block the commercial dollar deposits of our state banks. If this threat materializes, this will be a blow not only to rouble, but also the economy as a whole.
“SP”: — And if not feasible, have the ruble able to strengthen?
The special tendencies to strengthening of the ruble I can’t see. The Ministry of Finance has announced that from 15 January, the Central Bank on its behalf returned to purchases of the dollar on the open market. If we begin to buy the currency, and in terms of sanctions would be to refuse purchases of Russian debt instruments, it will again spur the trend on the depreciation of the ruble.
Prerequisites for its strengthening is not visible. Cheaper oil, the sanctions are not cancelled. The engineering component of our industry is not growing at the pace expected. Of course, there may be some market fluctuations or extraordinary events in the American economy, which will lead to the weakening of the dollar. But while objectively they are not visible.
“SP”: — How the weakening of the ruble will affect the population of the country?
— Fluctuations in the region of 70 will not lead to the impoverishment or enrichment of the masses. But the General trend is, unfortunately, focused on the fact that we all gradually gradually poorer. And this trend in 2019 will continue. There are no preconditions to ensure that we have a better life. Another good idea, if we live the same as this year. There is no direction that would have pushed our economy forward.
On the other hand, any changes in internal and external politics, as in Economics, not expected, and, therefore, should not be any sudden shocks. Although the imminent increase in the tax burden will negatively affect the entire population. But this is a personal initiative of the Ministry of Finance, dollar direct relation not having. I would say that in 2019, the dollar will have much less impact on the welfare and living standards of the population than the introduction of new tax initiatives of our government.
Financial analyst at BCS Ivan Kopeikin also sees a positive for the ruble in 2019.
Now there are quite a few factors that speak against the ruble. These are the negative points like the VAT increase, which will increase inflation and push the ruble to weaken, and the possible political provocation by Ukraine or other countries the New year, and the sanctions rhetoric.
In addition, this tightening of monetary policy, not only in Russia but also worldwide. The fed once again raised the rate, plans to do it next year. Countries no longer print money, and that means cheap money will be less. It primarily hit developing countries, which increases the risk of capital outflows. All this will put pressure on the Russian national currency.
Oil is now also at low levels. At such prices, the ruble still looks quite. But this factor will also put pressure on the currency. Maybe if something happens in the financial markets, the ruble may strengthen, but if we consider the quarter, the negative trends will continue and the ruble is likely to fall below 70 per dollar.
“SP”: — How much lower?
— I do not think that the weakening will be very strong. The ruble will be in the range of 67-72 the possible short-term consolidation. But the full movement up we in the first quarter of the year will not see. Will dominate the trend for a moderate weakening of the ruble.
Analyst “Discovery Broker” Timur Nigmatullin, in contrast to his colleagues, believes that the ruble have a moderately positive scenario.
— The highest probability from the point of view of the most liquid item in the currency market of the Moscow exchange, that is, the pair dollar-ruble is strengthening of the ruble against the dollar. But you need to understand that if trading session will be held in the middle of the holidays, illiquid market movement can be in one or the other. Any major player, for example, a Bank that suddenly need dollar liquidity, can shift the balance of supply and demand.
But fundamentally, the ruble should be strengthened. We expect that by the end of the first quarter on the pair dollar-ruble will be range of oscillation with the center 65-66.
“SP”: — Why the ruble will begin to strengthen? Until it looks like this…
— It will be associated with a reduction in geopolitical risks. A little bit of support will add the increase in oil prices. Also impact and improve seasonality. In December there are large payments on external debts, both the state and the private sector, there is a significant demand above average levels for imports of goods and services, such as tourism. Seasonality in the new year is negative, but closer to the end of the first quarter, the situation is normal, and there are expectations that the ruble will strengthen.
For oil we are seeing positive trends. We believe that it will begin to grow, and by the end of the first quarter will reach $ 60 per barrel Brent.
“SP”: — Why oil prices will start to rise again?
The key point is the OPEC agreement regarding the reduction of oil production. Now the demand is about 1% lower than the supply, due to an increase in US production and other factors. In addition to the imbalance of supply and demand has a strong negative speculative element. Market players see that the world economy is slowing down, the fed raises rates, which is a sign of a slowing American economy. Trade disputes with China also did not add optimism. The smaller the growth rate of the world economy, the less demand for oil. The proposal, meanwhile, is growing.
In the first quarter of 2019 will operate the agreement OPEC+. It just take that one percent oversupply. It’s also possible an agreement will be reached between the trump and the Chinese leadership and the risk of pressure on the economy will be lifted. Together this will support oil prices.
“SP”: — That is, the current weakening of the ruble — a temporary phenomenon?
Seasonality plays an important role. Payments on external debt, import demand, then there is a weak trade balance, now coming to the fore. But those factors which I have already said. It is oil, and the inertial component of the market. If he started to weaken, all the waiting, it would be even worse if began to strengthen, all the positive moods are prevalent. The market did not immediately notice the reasons for the positive, it goes with the trend. But if the positive factors will become a lot of market players will understand that there will be a further significant weakening, they will begin to play on the rise.
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