Excitement of the course: how the situation on the currency market of Russia has changed in a week

On Friday, September 27, trading on the Moscow Exchange was accompanied by a slight weakening of the Russian currency. The dollar exchange rate increased by 0.2% - to 64.33 rubles, and the euro exchange rate - by 0.3%, to 70.35 rubles.

The official exchange rate of the Central Bank as of September 28 was 64.41 rubles per dollar and 70.31 rubles per euro.

On the whole, the outgoing week was remembered by investors by sharp fluctuations in the Russian currency market. Under the influence of a number of factors, the ruble managed to rise in price by a record, after which the national currency was slightly adjusted.

So, even on Tuesday, the dollar fell to 63.61 rubles, and the euro fell below the psychological mark of 70 rubles and at the moment reached its lowest level since March 2018. However, on Wednesday, the dynamics began to change, and in the past few days, the dollar has been trading above 64 rubles, and the euro - in the range of 70-71 rubles.

As a senior analyst at BCS Premier Sergey Suverov said in an interview with RT, at the beginning of the week, the ruble was largely supported by the tax period. At this time, traditionally, exporting companies begin to sell foreign currency and buy rubles for taxes. As a result, growing demand strengthens the Russian currency.

In addition, RT experts surveyed explained the appreciable appreciation of the ruble against the euro by the global weakening of the single European currency against the US dollar. To date, the corresponding rate has fallen to a two-year low and is trading near the mark of $ 1,091 per euro. The last time a similar value could be observed back in April 2017.

As the head of the laboratory of the Institute of Applied Economic Research of the RANEPA, Alexander Abramov, noted in a conversation with RT, investors negatively assess the prospects of the European economy. The decline in business activity observed in September in the region’s production risks spreading to other economic sectors in Europe. This statement was made on Monday by the Chairman of the European Central Bank (ECB) Mario Draghi.

According to the head of the ECB, to support economic growth, the regulator can soften its monetary policy and lower interest rates. Such actions should lead to cheaper loans, increased domestic demand and increased investment. At the same time, the expected reduction in rates will make investment in European assets less attractive for investors and will further weaken the region’s common currency.

“I think that in the future the dollar will strengthen against the euro, because the ECB has already confirmed its intention to pursue a facilitated monetary policy in the eurozone. In general, pessimism reigns among investors in the eurozone. That is why the region’s currency will become cheaper in relation to the American one, ”said Alexander Abramov.

Although players in the Russian foreign exchange market reacted positively to the global weakening of the euro, investor sentiment was worsened by the news of the impeachment of Donald Trump.

On the evening of September 24, the US Congress initiated the process of removing the American president from power. This was announced by House Speaker Nancy Palosi. She accused the head of the White House of abuse of authority and political pressure on Ukrainian leader Vladimir Zelensky. According to Palosi, the President of the United States allegedly demanded that his Ukrainian counterpart initiate an investigation into a potential rival of Trump in future elections in exchange for military assistance to Kiev from Washington.

“Trump’s impeachment intensified political tensions and caused uncertainty among investors. As a result, a situation of “risk aversion” has developed on the world market. In this situation, as a rule, risky assets — raw materials, stocks, currencies of emerging markets, are under pressure, ”explained Mark Goichman.

According to analysts, the ruble was also under pressure from market sentiment and began to weaken by the end of the week. At the same time, experts expect that the situation in the markets will stabilize in the near future. So, after a short-term panic, investors will begin to assess the real prospects for Trump's resignation.

“For most market participants, the future prospects of this impeachment are completely incomprehensible. At the moment, the situation has not yet caused shock in society. Some individual concerns remain, but in general, this has not yet seriously affected financial markets, ”said Alexander Abramov.

With an eye on oil

According to experts interviewed by RT, the dynamics of the ruble during the week was also slightly affected by the decline in world oil prices. From Monday to Friday, the price of Brent benchmark crude fell from $ 65 to $ 62.5 per barrel. Such data are provided by the ICE exchange in London.

According to Sergei Suverov, energy raw materials began to become cheaper after the news about the restoration of oil production in Saudi Arabia. After the airstrikes inflicted on the country's oil enterprises, the kingdom managed to make up production by 75%, Reuters sources said.

Recall, September 14, unmanned aerial vehicles attacked oil refineries in Saudi Arabia. As a result, a significant reduction in hydrocarbon production caused panic among investors and triggered a sharp increase in prices. However, with the recovery of production quotes began to gradually decline.

According to Mark Goichmann, pressure on oil prices was also exerted by the news about the beginning of the impeachment of trump. At the same time, the expert notes that the Russian currency reacted weakly to the unstable dynamics of the oil market.

The current state of affairs of the analyst associates this with the action of the budget rule. It provides that during the growth of commodity quotes, the Ministry of Finance buys foreign currency and thereby puts pressure on the ruble. Moreover, in the event of a collapse in the energy market, the Ministry of Finance ceases operations and the pressure on the ruble weakens. As a result of such actions, the dependence of the national currency on oil begins to decline.

“The dependence of the ruble on oil is not as significant as it was several years ago. The purchase of currency by the Ministry of Finance within the framework of the budget rule, the budget surplus, balance of payments and trade, the decrease in public debt - all this smooths out fluctuations in the exchange rate. With sharp jumps in oil quotes, the ruble still responds with some changes in the exchange rate, although much less. So, this week the fluctuations in the value of Brent amounted to 7%, and the ruble - only 1.3%, ”said Mark Goikhman.

Warm october

On the whole, RT experts surveyed forecast stable ruble dynamics in the near future. According to Sergei Suverov, the national currency remains attractive to foreign investors in terms of carry trade operations.

Such a financial strategy involves the acquisition of the currency of the state in which low interest rates are established, with the subsequent investment of this money in the currency of countries with high interest rates to obtain greater profit.

“In October, the exchange rate of the Russian currency can maintain relative stability, moving in the range of 63–66 rubles to the dollar, and to the euro - in the corridor of 68.5–72.5 rubles,” Suverov noted.

As Mark Goichmann notes, in October market players will also closely monitor the development of US-China trade negotiations. If the parties advance in the issue of concluding a deal, global investors will react positively. In this case, the expert admits the strengthening of the Russian currency to the level of 62.6-63.5 rubles per dollar.