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The Ministry of Finance will not let the ruble strengthen

Минфин не даст рублю укрепиться

On 15 January the Central Bank would resume purchases of foreign currency on the open market for the Ministry of Finance in the execution of the budget rules. The purchase volume will be 15.6 billion rubles a day. In January, the Central Bank will direct on purchase of foreign currency 265,8 billion rubles. These funds will be withdrawn from circulation the currency of the market in the form of a basket of dollars, euros and pounds aimed at the replenishment of the national welfare Fund (NWF). Until February 8 the Finance Ministry is instructed to purchase on the Moscow stock exchange $ 4 billion. the amount of the expected windfall from the sale of oil (which is anything over $ 40. for Barr.)

Most likely, this will affect the rate of the national currency, however, experts disagree about how much. In addition to purchases of foreign currency to the ruble will be affected by factors such as oil prices and sanctions. All this leads to the fact that the national currency will once again start to weaken after strengthening early in the new year and by February may go down to 68-69 for a dollar.

Recall that the decision to suspend purchases of foreign currency on the open market was made in the autumn due to a serious weakening of the ruble. After that, the national currency stabilized, and the Ministry of Finance passed on the purchase directly from Central Bank reserves. However, at the end of 2018, the year the real effective rouble rate decreased by 7.7% (relative to basket of foreign currencies of countries that are major trading partners of Russia).

In December 2018, the ruble again began to weaken and reached to the level 70 to the dollar, but in the beginning of the new year has appreciated by almost 3 rubles to the dollar and 4 to the Euro. The ruble on Monday, January 14, the exchange has made 67,18 per dollar and 77,06 per Euro. Oil cost in the area of 60.16 USD. per barrel. Brent. This oil has given a positive dynamics of the rouble in January — she played a nearly 20% drop in December, when prices reached $ 50/bbl.

So January for the ruble will be good. But then the growth will come to naught, and will begin a new round of fall. Especially if we fail to maintain the oil at the current or higher level.

So what will the dollar in the coming months? For example, Denis Poryvai from Raiffeisenbank believes that in January the purchase of foreign currency will not affect the exchange rate because of the seasonal strength of his position due to the difference between imports and exports. But in February, when the value of seasonality fall, the Russian currency may fall up to 68 rubles to the dollar.

Economists of Alfa-Bank believe that the reasons for the fall of the ruble will be external — new U.S. sanctions, the likely drop in oil prices and a trade war between the major market players.

Respondents “SP” economists don’t believe that the current strengthening of the ruble will last a long time. But even if the situation is favorable, for example, the price of oil will rise considerably thanks to a deal OPEC+ reduction of production, purchase of currency by the Ministry of Finance in the amount of the surplus from oil revenues just will not let the ruble strengthen stronger current value. But to fall at any moment. If you wish to transfer part of their savings in the dollar, it is advisable to do it now.

At the beginning of 2018, the Finance Ministry was making ambiguous statements that a strong rouble it is not necessary, — the analyst CC “Finam” Sergey Drozdov. — Subsequently, using the budget rule, the Agency has embarked on its gradual weakening, resulting in further the Russian currency began to ignore the positive, from time to time prevailing in the commodity markets.

After a strong fall of the ruble in December last year, the beginning of 2019, was marked by its smooth growth, aided by rapidly recovering oil prices and favorable conditions in foreign markets. In my opinion, the resumption of purchases by the Ministry of Finance of the foreign currency on the open market will not provoke a sharp weakening of the ruble, but to prevent its significant strengthening in the future is quite capable. Likely within 2019, the national currency will be in the range of 65 — 75 with a possible exit to around 80 against the dollar.

Head of analytical Department of “Grand Capital” Sergey Kozlovsky believes that the ruble will begin to decline in the coming weeks, but is still insignificant.

— The expected return of the Bank of Russia on the open market immediately will have a negative impact on the ruble. Any currency is under pressure, when the Central Bank conducts interventions — it is a normal practice.

Note that the resumption of the decline in oil prices will significantly reduce the activity of the Central Bank, and in turn, the resumption of growth in prices on the raw materials market will give the regulator more room to maneuver.

“SP”: — What are the prospects for the Russian currency?

We orientirueshsya moderately negative dynamics of oil prices for the entire 1st quarter. This will not prevent the Central Bank to conduct a series of purchases of foreign currency in favor of the Ministry of Finance. This fact, as well as a General reduction in risk appetite in the market together with rising inflation will put pressure on the ruble. The target rate for the next 6 weeks is 67-67,50 rubles. per dollar.

BCS analyst Ivan Kopeikin believes that the optimism in the market will not last longer than January.

— Resumption of purchases of foreign currency for the Ministry of Finance will lead to increase in demand in the market. But I wouldn’t say that it immediately begins to affect the exchange rate. The fact that there is a factor of expectations of what happens after the fact. That will start the purchase of foreign currency, already partially incorporated in the course. Market participants have a slight upward movement in the pair dollar-ruble in advance. But currency purchases in January will not be as significant as in the autumn, due to the fact that the price of oil fell. Therefore, the effect of output price on the market will be minimal. I don’t think it will give even half a percent of the downward movement.

“SP”: — And what to expect from the ruble in the medium term?

— I do not exclude local strengthening of the ruble in the short term up to a month. In the market there is local optimism for a rebound in oil prices and the lack of monetary policy tightening. But medium-term prospects are not very bright.

“SP”: — Why?

The first reason is that the tightening of monetary policy in the US and in the world. Central banks end quantitative easing, that will lead to the weakening of the currencies of developing countries against the outflow of capital from them.

For oil, the factors that it was weakened, did not disappear. On the background reduce the cost of production of shale oil will continue increasing production in the United States, other countries, the production can also enter a new stage. Hence, the excess supply in the market will not allow prices to go up.

Therefore, in the medium term we expect the return of the ruble to the mark of $ 70 and above. But for the next month the picture is cautiously optimistic.

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