On Friday, March 13, trading on the Moscow Exchange is accompanied by a moderate strengthening of the Russian currency. In the middle of the day, the dollar fell by 3% - to 72.5 rubles, and the euro - by 2.9%, to 81 rubles.
The official exchange rate of the Central Bank on March 14 was set at 73.19 rubles per dollar and 81.86 rubles per euro.
Positive dynamics are also shown in the Russian securities market. The Moscow Stock Exchange index grew by 5.4% to 2410 points, and the RTS index - by 8.75%, to 1051 points.
National currency and stock quotes are gradually recovering after a sharp weakening the day before. So, at the auction on March 12, the dollar for the first time since February 2016 exceeded 75 rubles, and the euro rose to 84.8 rubles. At the same time, the Mosbirzhi index fell to 2277 points (for the first time since December 2018), and the RTS index fell to 966 points. This value has become the lowest since June 2017.
The depreciation of the ruble and Russian securities continued from the beginning of the working week and was largely due to the aggravation of panic in the global financial market, as well as a drop in oil prices. After the World Health Organization announced the coronavirus pandemic in the world, on March 12, stock indexes in Europe and Asia updated the lows of the last few years. At the same time, stock quotes in the USA fell by 9-10% - the collapse became the strongest since 1987.
However, in the coming days, the situation in the global stock market may stabilize, experts say. According to Vyacheslav Abramov, director of the BCS Broker sales office, RT said investors can reassure the US Federal Reserve.
On the eve of the US Federal Reserve announced an additional cash infusion into the financial system of the United States. As expected, the regulator’s decision will allow to stop the massive sale of securities and increase demand for risky assets, including the ruble.
“The Fed has announced an additional injection of liquidity into the US financial system in the amount of $ 1.5 trillion. The decision will be positive for the ruble, although the market has not yet really appreciated this step. In addition, one can observe a local slowdown in the growth rate of coronavirus distribution in China, which already strengthens the demand for risky assets among investors, ”Abramov explained.
According to analysts, the ruble at Friday's trading is also supported by the restoration of world oil prices. On the eve of the raw materials of the reference brand Brent fell by 7%, to $ 33.5 per barrel, but at the moment quotes have risen to $ 35. Such data are provided by the ICE exchange in London.
Recall that on Monday, March 9, the cost of raw materials at international sites fell by more than a third and at the moment reached $ 31 per barrel. The collapse of quotations became the largest since 1991.
The reason for the shocking market situation was the unexpected collapse of the OPEC + alliance. On March 6, the parties to the transaction were unable to agree on an additional reduction in oil production and decided to completely abandon all previous obligations.
Strengthening factors
Against the background of the emerging risks for the national currency, the Central Bank of the Russian Federation urgently introduced special measures to maintain the ruble exchange rate. So, from the beginning of the working week, the Central Bank began proactive sale of foreign currency in the domestic market.
According to Anna Bodrova, senior analyst at Alpari IAC, RT’s actions by the Bank of Russia have already had a positive effect on the Russian currency and helped keep the dollar exchange rate from 79–80 rubles. In addition, the regulator also began to provide additional cash to the Russian banking sector.
“On March 13, 2020, taking into account the fluctuations of exchange rates and prices of financial assets in the Russian and global financial markets during the current week, as well as the actions of central banks of other countries, the Bank of Russia decided to hold a fine-tuning repo auction in the amount of 500 billion rubles, ”the Central Bank said in a statement.
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In conditions of fluctuations in the foreign exchange market, the actions of the Central Bank should support the work of credit organizations. This was told by RT analyst at Finam Group of Companies Alexey Korenev.
“REPO is a kind of loan replacement, only more simple in technical terms. The essence of these actions of the Central Bank is that none of the major players in the banking sector experience a shortage of cash, because against the backdrop of a panic, an outflow of deposits may well begin. Many of the lending institutions will need support from the regulator. Therefore, an increase in REPO auctions is quite natural in this situation, ”said Korenev.
According to the Central Bank, the regulator continues to closely monitor the situation on the market. At the same time, Central Bank experts positively assess the readiness of the Russian financial system for possible external shocks.
“Now the Russian financial system is better prepared for external shocks than in 2014-2015. Buffers of both capital and liquidity have been accumulated in the banking and financial system as a whole, both in rubles and in foreign currencies. The volume of foreign and domestic foreign currency debt has declined in recent years. The budget rule largely isolates the budget from fluctuations in oil prices, ”the Central Bank said in a statement.
In addition to the actions of the Central Bank and the restoration of oil prices, the approach of the tax period also plays in favor of the ruble, Vyacheslav Abramov believes. At this time, exporting companies traditionally begin to sell foreign currency and buy rubles for taxes.
“The tax period starts on March 16th. Exporters will sell the currency, and it is worth noting that the volume of payments will be quite large (about 2.6 trillion rubles), as income tax for 2019 will be paid, ”Abramov explained.
According to the analyst, the further dynamics of the Russian currency will largely depend on the situation with coronavirus and oil prices. According to the Ministry of Energy, already in the second half of 2020, quotes may return to the level of $ 40-45 per barrel. According to analysts, in this case, the dollar may again fall below 70 rubles.
“If the picture is favorable, the pandemic will start to slow down and oil prices will stabilize at $ 40–45, then the dollar may drop to 68–70 rubles, and the euro to 76–78 rubles,” concluded Abramov.