Looking back at the pandemic: how the ruble exchange rate changed in 2020

In December, the Russian currency managed to strengthen significantly on the Moscow Exchange.

So, since the beginning of the month, the dollar rate has dropped by more than 3% and is currently trading in the range of 73-74 rubles, and the euro rate - by 1.3%, to 90 rubles.

Moreover, in mid-December, the indicators briefly decreased to 72.6 and 88.4 rubles, respectively.

The situation in the Russian foreign exchange market is gradually stabilizing after sharp fluctuations throughout 2020.

As Ivan Kapustyansky, a leading analyst at Forex Optimum, noted in a conversation with RT, in the outgoing year the ruble came under pressure from a number of external factors.

First of all, we are talking about the consequences of the coronavirus pandemic.

“Against the background of the rapid spread of the disease, state authorities were forced to introduce quarantine measures, which led to a temporary halt in the entire global economy.

In a panic, investors began to withdraw their money from the so-called risky assets, which include the ruble, ”explained Kapustyansky.

Note that the first exchange trading in 2020 started near the mark of 62 rubles per dollar and 69 rubles per euro.

Thus, compared to January, the Russian currency has lost more than 19% of its value in relation to the American and 30% to the European.

The most notable weakening of the ruble fell on two periods - March and November.

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• © Alexander Avilov

Recall that the first cases of coronavirus were recorded in China in December 2019, and in February 2020, the number of cases in China approached 80 thousand.Although the introduction of strict restrictions made it possible to stop the epidemic within the country, the infection managed to spread outside the Asian republic.

In early spring, the number of cases began to skyrocket around the world, and in mid-March, the World Health Organization announced the beginning of a pandemic.

At that time, the dollar and euro rates rose above 75 and 84 rubles.

Oil pressure

In addition to the panic of investors, the deteriorating situation in the energy market played against the Russian currency.

The imposition of lockdowns and the closure of borders have led to a sharp drop in global fuel consumption.

Amid falling demand, the price of Brent crude oil fell from $ 71-72 per barrel in January to $ 49-50 by the beginning of March.

According to experts, the actions of the countries participating in the OPEC + deal should have stopped the fall in oil prices.

It was expected that the states would reduce the production of raw materials and thereby balance supply and demand in the global hydrocarbon market.

However, in March, following the meeting, the parties could not agree and decided to completely abandon all obligations assumed.

“Active“ oil wars ”have begun between the participants in the OPEC + deal in the struggle for market share.

For example, Saudi Arabia announced that it intends to sell energy resources at a discount to its partners.

Such a policy was not crowned with success and only led to the destabilization of the market, "Alexey Korenev, an analyst at Finam Group, told RT.

In the second half of March, the price of Brent crude oil dropped below $ 25 per barrel.

At the same time, the dollar rate approached 82 rubles, and the euro rate approached 90 rubles.

The values ​​are at their highest since 2016.

Time for respite

In April, the situation on the oil market continued to deteriorate.

So, in the middle of the month, Brent quotes fell to a minimum in 21 years and fell below $ 16 per barrel at the moment.

In turn, the cost of a barrel of American WTI grade for the first time in history fell to negative values ​​and reached minus $ 37.6.

Thus, oil producers were willing to pay buyers themselves for the supply of their raw materials.

The collapse of the oil market forced exporters of raw materials to return to the negotiating table and resume cooperation.

On May 1, OPEC + members again began to reduce oil production.

At the same time, the demand for energy resources in the world began to gradually recover, as the rate of spread of the coronavirus slowed down, and more and more states began to weaken quarantine measures.

Against this background, at the beginning of June, the price of Brent oil rose above $ 40 per barrel, while the rates of the dollar and the euro fell to 68-69 and 76-77 rubles, respectively.

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• © Jessica Lutz / File

According to Mark Goikhman, chief analyst at TeleTrade Group, at the beginning of summer, the gradual strengthening of the ruble was also facilitated by the measures of the Russian authorities to support the economy in the context of the coronavirus.

We are talking about soft loans for businesses, credit holidays, regulatory concessions for banks, as well as direct financial assistance to the population.

“All these measures stimulated a high demand for the national currency, which, in turn, had a positive effect on the exchange rate,” explained Goikhman.

Moreover, the national currency was supported by the actions of the Bank of Russia.

To stabilize the ruble exchange rate, on March 10, the Central Bank began a proactive sale of foreign currency in the domestic market.

Thus, the Central Bank artificially increases the demand for rubles.

In total, within the framework of the initiative, the regulator sold foreign currency in the domestic market for a total amount of over 1.6 trillion rubles.

In addition, the record rate cut by the Central Bank has played in favor of the ruble, says Alexey Korenev.

Since the beginning of the year, the regulator has lowered the percentage of borrowings from 6.25 to 4.25% per annum - the minimum level for the entire post-Soviet period.

Note that the Central Bank's key rate affects the yield on Russian federal loan bonds (OFZ).

If the Central Bank reduces the percentage of borrowings, investments in OFZs bring investors less income.

Therefore, amid a record rate cut, players began to buy up securities in advance at a favorable price, which had a positive effect on the ruble.

“In addition, the rate cut has become an incentive for an accelerated economic recovery from the effects of the pandemic.

Loans have become more affordable for businesses and the public.

In general, due to a set of operational measures, the ruble felt a little better during the pandemic than the currencies of a number of other countries, ”added Alexey Korenev.

Geopolitical factors

However, already in the fall, geopolitical factors began to exert pressure on the ruble, experts admit.

As the general director of Sputnik Capital Management, Alexander Losev, told RT, political instability in Belarus and the aggravation of the conflict in Nagorno-Karabakh have brought temporary uncertainty to financial markets.

“Many investors feared that the military confrontation in the region and the political crisis in neighboring Belarus could create a negative background for the key currencies of emerging markets, including the ruble.

Under these conditions, in September the dollar and euro rates began to grow steadily again, ”the expert emphasized.

In addition, the fall on the dynamics of the Russian currency was influenced by the presidential elections in the United States, said Losev.

According to him, the active struggle for the seat of the head of the White House has also increased the uncertainty in the markets and reduced investors' appetite for risky assets.

Against this background, the day before the start of voting in the States, the dollar rate again approached 81 rubles, and the euro rate rose above 94 rubles - for the first time since 2014.

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• © Bing Guan

“At the same time, we saw another worsening of the epidemiological situation in the world.

Investors realized that the second wave was inevitable, and the states would be forced to reinforce restrictive measures again, so they began to invest in more reliable assets, for example, in gold, ”added Alexander Losev.

Note that the weakening of the national currency had a positive effect on the activities of Russian exporters.

As Aleksey Korenev explained, the depreciation of the ruble leads to a decrease in the cost of Russian goods on the international market and makes domestic products more competitive.

“This state of affairs allowed our companies to increase supplies to foreign sites, which had a positive effect on their profits.

At the same time, an increase in revenue also means an increase in tax payments that corporations pay to the budget, "Korenev said.

Meanwhile, by the beginning of winter, the ruble began to partially recoup losses.

As Ivan Kapustiansky explained, investors were optimistic about the news about the development of drugs for coronavirus, as well as about the beginning of vaccination in Russia and a number of other countries.

“Successful drug trials and further global vaccination of the population have given investors hope for an early victory over the COVID-19 pandemic.

Taking into account this factor and the favorable geopolitical situation in the world, in 2021 the national currency has a chance to return to the range of 70-72 rubles per dollar, ”the analyst concluded.