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Complete collapse: Ruble did not leave a single chance

Полный обвал: Рублю не оставили ни единого шанса

The dollar by persisting with attempts to overcome the mark of 65 rubles per USD, still did it. Ruble though and resisted the forces of the past, could not resist, especially after the news about the new sanctions the United States in connection with charges of attempted murder of Sergei Skripal and his daughter Julia.

First on Friday’s trading session, the Russian currency managed to win back more than 20 cents, strengthening to 64,73. The Euro also fell to of 72.76, but all attempts were in vain. Just half an hour of trading the dollar soared from 65,005 to R. 65,6625 RUB to 18:10 PM. By the end of the day, the currency rebounded slightly and was trading in the area of 65.50 rubles per dollar and 73,50 for the Euro.

But two weeks ago it seemed that the ruble will continue to strengthen and take the level of 63 and 62 per dollar. But now it will be good if he will be able to hold at least this position. In so doing, it can help grown-up in oil prices, which almost reached $ 69 per barrel of Brent.

“In the second half of the previous session, the ruble moved to the upward correction, significantly rebounding from weekly lows against the dollar and the Euro. Today a positive trend in the Russian currency continued, which mainly benefited from a significant recovery in oil prices that began yesterday after the strong failure — explained the results of the pre-sanctions part of the day expert on the stock market “BCS” Dmitry Babin. — Em currencies in the second half of the previous session also was able to stop the strong reduction by going to corrective attempts, which are observed today.”

However, according to analysts, the fundamental reasons for the strengthening of the ruble and without sanctions was not. The economy is stalled, so it remains to hope for a favorable external environment.

“The ruble continued to show relative stability, restrained as reacting to negative signals from external markets and on the positive. Probably the current exchange rate of the Russian currency is fairly balanced in terms of economic and financial conditions, and cash flow,” says Babin.

Moreover, some analysts literally days ago were convinced, that is not followed by serious external shocks like a tough sanctions against our banking system and the ruble will remain fairly stable, and the dollar is unlikely to overcome the level of 65. And here, external shocks, that is, began.

“In a situation of actual absence of internal and external factors of influence (obviously, the lack of short duration, because, for example, election day in Ukraine are already on the nose) the main pressure was exerted on him banal way instantiable human fears” — commented news expert “International financial centre” Vladimir rozhankovsky.

The problem is that sanctions follow always unexpected. On Friday morning, 90% of the experts said that the ruble will remain at 65, and in the evening he calmly struck the mark after the announcement of the restrictions for Skrobala. And to predict when will be a new batch, almost impossible. But guaranteed that on the Russian currency it will affect negatively.

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In addition to the Western limits, the ruble may encounter internal problems caused by the policy of the authorities. So, the head of analytical Department of “Grand Capital” Sergey Kozlovsky does not exclude that the Central Bank may enter the open market with large-scale interventions that will inevitably lead to the weakening of the ruble.

“A continuation of the positive trend on the oil market combined with a change in the rhetoric of the US Federal reserve about further tightening of monetary policy supported risk appetite, due to which the rouble received support.

However, at the moment is to focus on possible intervention from the Russian financial authorities. With high probability the Central Bank will come out on the open market and this will put pressure on the ruble. By the end of the second quarter, the ruble will drop to 66 rubles per dollar” — that is the forecast “Grand Capital”.

Speaking of CB, Fitch estimates that from 2013, the regulator had to spend more than $ 70 billion on the normalization of the situation in the banking sector and the fight against weak and fraudulent banks.

However, as explained by SP associate Professor of stock markets and financial engineering of the faculty of Finance and banking (FFBS) of Ranepa Sergey hestanov, the ruble is reflected poorly, but saved the economy from even greater losses

— Of course, if you look at this amount in absolute terms, it is large enough. But if you divide it by the number of years that have passed, and compare with the total volume of the Russian economy, this figure looks quite reasonable. Of course, I wish it was less but if you compare spending and result, these figures are reasonable. In any case, the economic loss from the collapse of the banks would cost many times more. And at times — it means at least several times. From this point of view Central Bank policy looks very correct.

“SP”: — And these costs impact on the exchange rate?

— Almost not affected. Even the Bank was surprised that not only the rate but also the inflation rate responded poorly to this process. There were fears that the large financial investment may accelerate inflation, but this did not happen. This is another confirmation of professionalism of the Central Bank.

Returning to the ruble today, analyst FxPro Alexander Kuptsikevich believes that it will inevitably weaken, and if the sanctions pressure will increase in April we can see the dollar 68, and EUR 76.

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Since the beginning of the year the Russian currency has strengthened its position as a fortress, all the forces trying to we spent less in exchange for dollars and euros.

However, one in the foreign exchange market is not a warrior, but because by the middle of March the strength to bite teeth every step of the ruble left. The month ends with the hopes of investors: loss in value particularly noticeable in relation to the U.S. dollar. Most likely, this situation will prevail in April: foreign currency have to buy more.

“SP”: — That is, have no factors which could support the ruble?

— Let’s understand why no one “came to help” the ruble. Historically, the Russian currency very often gaining momentum since the second half of January, and stops its growth just in March. Therefore, the current year is distracting from the trend only by the scope (the ruble gained this year by as much as 7%) and starting date: immediately after the Christmas holidays.

But, anyway, the upside potential has been exhausted, when in this month USD/RUB dropped below 64, and EUR/RUB below 72.50. It was minimum levels of currency against the ruble since August and July of last year. Now, the Russian currency has significant room to weaken. At the same time, around it persists (and even increases) the number of risks.

“SP”: — What is it?

— First, the Bank of Russia sets the markets at lower rates, which significantly cools the interest in the ruble as profitable asset.

Second, in global markets, the growing tension, which requires increasing attention of regulators and enhances traction in protective assets.

Thirdly, the world economy is slowing down on all fronts, which hinders the growth of commodity prices.

Finally, fourth, the issue of anti-Russian sanctions sooner or later will emerge and, as in the previous year, it can happen in April.

In 2018 we saw how sharply the ruble would react to the sanctions: he was losing up to 10%. Such range of movement is able to force us to pay a dollar more 70. But even assuming such a sharp rise, USD/RUB able to go into the area 68 (+6.2% to the current level of 64).

Perhaps only after reaching those levels, it would be reasonable to say that the ruble began to seem unreasonably expensive considering the risks. Besides, in this area, we saw the strengthening of purchases of the Russian currency, as this time will be able to stem the retreat.

By the way, the slowdown in the global economy and tensions in the markets hurts not only the ruble, and Euro. Therefore, the increase on EUR/RUB may not be as significant, having strengthened about 5%: it is not excluded that in April, one Euro will give 76.

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