16.02.2017
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The weakness of the strong ruble

Какие сюрпризы может преподнести российская валюта?

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What happened?

Wednesday, February 15, the ruble has updated the mark of 56.6 per dollar and for 59.7 per Euro. This is the maximum strengthening over the past year and a half. The growth started in December last year (from 65 rubles/$) and during the week from 9 to 15 February 2017, the ruble grew by 5%. These figures contrast sharply with the budgeted: 67 RUB/$. The situation is also notable for the fact that the jump of the ruble is not dependent on oil prices, which was not changed in recent years, hovering around 55-56 $/bbl.

What could cause this?

One explanation for the significant growth of ruble predlogi member of the Board of Directors of the Bank Oleg Vyugin. In his opinion, massively buy up the roubles could a state company “Rosneftegaz”, which is now needed in the national currency. We will remind that “Rosneft”, which is part of Rosneftegaz, is in the process of purchase of “Bashneft”, which requires ruble assets.

The analyst of Bank “Zenit” Vladimir Evstifeev links the strengthening of the ruble with the approach of the tax period in Russia (it starts on February 15th). Since taxes are paid in rubles, demand for the national currency increased. According to experts, this is a temporary fluctuation.

Citibank analyst Denis Korshyliv notes that the policy of the Central Bank of the Russian Federation contributes to the attraction of foreign capital into the country. He draws attention to the fact that the declared level of inflation in the 2017 – 4%, which is almost 2 times less than the minimum rate of return on deposits (the rate of refinancing of the Central Bank – 10%). Thus, there remains the interest of foreign investors in national currency.

According to the portal Guru-Trade, in the future, the suspension of the strengthening of the ruble might occur in connection with the statement of the head of the fed (Federal reserve) the USA Janet Yellen that the increase in the key rate in the country is not precluded. Amid this news, investors have shown interest in buying dollars for deposits in banks of the United States, which usually leads to the growth of the dollar.

Official statements:

3the Kremlin is concerned by the strengthening of the ruble. Press Secretary of the President Dmitry Peskov on Wednesday afternoon savilthat the question of raising the rate Putin will be discussed at a meeting with acting Minister of economic development Maxim Oreshkin. However, in the transcript of the meeting, direct the discussion of the strengthening of the ruble is not. It is known that . to work on slowing inflation.

4According to the newspaper “Vedomosti”, the sharp strengthening of the ruble is also concerned about the Minister of Finance Anton Siluanov. According to him, if government does not start to buy foreign currency, the jump could be even more significant.

5on Thursday the head of the Ministry of agriculture Alexander Tkachev the TV channel “Russia-24” he said that the dollar is at 57 rubles “it’s not a disaster, but a severe blow to our national economy.”

Than good and worse than a weak ruble?

Anton Siluanov maintains that the intentional weakening of the ruble helps to maintain the competitiveness of Russian industry. In an interview with TV channel “Russia 24”, he said that Russian businessmen have already “accustomed” to the dollar at the level of 60 rubles. According to Siluanov, the further strengthening of national currency reduces the interest of foreign sellers in the Russian procurement. At the moment, the Russian production in accordance with the exchange rate it costs foreign buyers cheaper to own and is attractive to them.

However, the economist has to consider the situation from the other side. He warns that in the long run, the low exchange rate can lead to higher inflation: imports in ruble terms, much more expensive. Given that a large proportion of imports are capital goods rise in price will affect the cost of the final product, which will lead to higher prices in the country.

What are the expectations: will it rise or fall?

The analyst of Bank “Zenit” Evstifeev believes that the ruble is a little predictable. On the one hand, at the beginning of February this year, the Central Bank and the Ministry of Finance announced that it will buy foreign currency on the financial market, while the price of oil reaches specified in the budget. Thus the ruble will weaken. On the other hand, a high refinancing rate attracts foreign investors and strengthen the ruble. And ruble assets have high volatility, that is, they are highly variable. Markets may soon experience a “wave of risk aversion” against the ruble. In this case, the ruble may sharply fall off.

Nordeo Bank’s chief analyst Olga Lapshin hold pessimistic expectations. She noted that the ruble looks “perekrasivshis” compared with other macroeconomic indicators such as balance of payments and the budget deficit of the country. “The strengthening of the ruble can not be infinite,” she concludes.

An employee of the company “Alpari” engaged in brokering activities, Anna Kokoreva follows opposing views on the exchange rate. It links the growth of the national currency with its “undervalued”. According to the analyst, we are now seeing how the ruble is on the background of stabilization of oil prices “catching up”.

Expert’s Commentary specifically for HIT.Media

the Leonid Grinin, chief researcher of Economics, the economist, futurologist:

1the Pros of the expensive national currency, in my opinion, is obvious. Imports become cheaper, the prices which have been bullied, can slow down and fall, and slows down inflation. There is a plus for investors: when a stronger currency may increase capital inflows. The strengthening of the ruble may impact in a positive way and from the point of view of the Central Bank, reducing the targets for inflation. But in the long run it is profitable will be.

Serious disadvantages are waiting for the exporters. Falling profits remain costs, increasing the price index with meager revenue, which, being in the foreign currency decreases in ruble terms.

I believe that to rely on this strengthening is not necessary, because the main issues in the restructuring of the economy have not been solved. Maybe not the lowest price on natural resources, but it can not rest on our laurels. Even if the oil price rises substantially, and borrowing becomes easier, then the country mired in their problems completely.

Developments

the material from the website of the newspaper "Vedomosti"
Infographics: website of the “Vedomosti”newspaper

According the international analytical company MSCI, starting in 2016, the ruble rose against the dollar by 25%, while the currencies of other developing countries appreciated on average by 7%.

Infographics from the site banki.ru
Infographics from the site banki.ru

The ruble began to crumble in the second half 2014: from the level of 35.5 rubles/$ in August to 60 rubles/$ in December. In October, the Central Bank adopted the decision on transition to a floating exchange rate. The minimum level of the ruble reached in January 2016 – 80 RUB/$. The last time the dollar was worth less than 58 rubles in July 2015. Information taken from site banki.ru.

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