On Wednesday, April 1, the Russian currency is moderately weakening on the Moscow Exchange. During the opening of the first auction of the month, the dollar rose by 0.9% - to 79.09 rubles, and the euro - by 0.6%, to 87 rubles.
At the end of March, the national currency fell by almost 15% against the dollar and the euro. At the same time, in the middle of the month, the courses rose to 81.9 and 89.6 rubles, respectively. These values have become the highest since the beginning of 2016.
The main reason for the negative dynamics in the foreign exchange market was the record collapse in world oil prices. Over the past month, the cost of energy products of the Brent benchmark on the ICE exchange in London more than doubled and at the moment fell below $ 22 per barrel - for the first time since 2002. At the moment, the value fluctuates near the mark of $ 25.
Quotes of Russian Urals oil fell to $ 13 per barrel. This happened for the first time since March 1999. The relevant data are presented in the report of the Argus Media agency.
Oil fell sharply after the failure of the negotiations on the OPEC + deal. Amid falling global demand for energy sources due to the coronavirus pandemic, the parties to the agreement, including Russia, tried to agree on an additional reduction in hydrocarbon production in order to stabilize the market situation. However, on March 6, following the meeting, the parties did not reach consensus and decided to completely abandon all obligations undertaken earlier.
As early as April 1, energy-exporting countries plan to start increasing oil production and export. According to experts, such actions will lead to a significant increase in the supply of raw materials in the world market and may provoke an additional reduction in prices.
“In April, the OPEC + transaction, which could not be extended in March, is finally completed. This means that the cost of a barrel of oil in the world market may drop to record low marks of $ 20. It is likely that against this background, the dollar may again rise to 80 rubles, ”said Yuri Mazur, head of CEX.IO Broker data analysis department.
According to analysts, in the coming month, additional pressure on the value of the Russian currency may be caused by uncertainty in the global financial market due to the coronavirus. According to official data from the World Health Organization (WHO), the total number of people infected in the world has reached almost 755 thousand, more than 36.5 thousand people have died.
The spread of the disease and the quarantine measures introduced by states provoked a massive reduction in the volume of industrial production, trade and passenger traffic in the world. Against this background, the International Monetary Fund (IMF) has already announced the beginning of a recession in the global economy. According to experts, the current state of affairs intensifies panic among investors and leads to a decrease in demand for risky assets, including the ruble.
“Investors continue to evaluate the impact of the COVID-19 pandemic on the global economy, worsening forecasts. This factor is the key driver at the moment, which prevents the global financial markets from stabilizing and starting to recover, ”said Ivan Kapustyansky, a leading Forex Optimum analyst in an interview with RT.
- Reuters
- © Maxim Shemetov
To a certain extent, ruble dynamics was affected by the announcement of a non-working week in Russia and the introduction of a self-isolation regime in many regions in connection with coronavirus. Investors fear a decline in consumer demand and possible financial losses of the business.
“The coronavirus has just begun to spread throughout the country, making it difficult to make predictions about the duration of the quarantine, which limits the Russian economy. Even after defeating COVID-19, it will take months for the final restoration of the business, ”explained Gennady Nikolaev, an expert at the Academy of Finance and Investment Management.
No extra jumps
Meanwhile, the experts surveyed do not expect a significant weakening of the Russian currency in April. According to Vyacheslav Abramov, director of the BCS Broker sales office, RT, depending on the external background and the dynamics of oil prices in the coming month, the dollar will be in the range of 76–81 rubles and the euro at 84.6–89 rubles. In turn, according to Gennady Nikolaev, the corresponding rates will fluctuate around 77–80 rubles and 84.5–86.3 rubles, respectively.
National currency support is provided by the actions of the Bank of Russia. Recall, in order to stabilize the ruble exchange rate, on March 10, the Central Bank began proactive sale of foreign currency on the domestic market as part of the budget rule mechanism. Thus, the regulator artificially increases the demand for rubles.
Over the past three weeks, the Central Bank has increased the daily volume of foreign currency sold from 3.6 billion to 13.3 billion rubles. Egor Klopenko, creator of the ITLEADERS venture capital club, told RT that, in addition to the budget rule, an increase in sales was made possible through a deal to buy Sberbank shares from the Central Bank in the amount of about 2.5 trillion rubles.
“The government has a fairly high amount of foreign currency in the National Wealth Fund (NWF), which must be sold on the domestic market as part of the transaction to purchase Sberbank, and this provides significant opportunities to support the national currency. The same factor will not let the ruble collapse during the whole of 2020, ”Klopenko explained.
- Reuters
- © Lucy Nicholson
Moreover, RT analysts surveyed highly appreciate the likelihood of a new agreement between participants in the global oil market in the coming months. As expected, such a development will stabilize energy prices and could play in favor of the ruble.
“At the beginning of the week, Vladimir Putin and Donald Trump, during a telephone conversation, agreed on consultations on the oil market through energy ministers. There is a possibility that this conversation may become the basis for returning to the negotiation table to limit oil production. Even the scenario of a new union by analogy with OPEC +, which will include OPEC, Russia and the USA, is not excluded, ”said Ivan Kapustyansky.
According to Vyacheslav Abramov, after passing the peak of the coronavirus pandemic and possible agreements between raw material exporters, the cost of oil may return to the level of $ 40 per barrel. According to the expert, in this case, by the end of the year, the dollar exchange rate may drop to 70–72 rubles, and the euro exchange rate - to 76–78 rubles.