On Wednesday, December 1, the Russian currency strengthens slightly on the Moscow Exchange.
At the beginning of the day, the dollar and euro rates dropped by 0.35% - to 73.79 and 83.6 rubles, respectively.
The national currency is moderately rising in price after a noticeable weakening in November.
So, over the month, the dollar rate rose by 4.4% - up to 74.07 rubles, and the euro rate - by 2.4%, up to 83.9 rubles.
At the same time, at the end of November, the values briefly rose to 75.92 and 85.69 rubles, respectively.
The pressure on the ruble was largely exerted by a sharp drop in oil prices, experts say.
So, in November, the raw material of the reference grade Brent fell in price by almost 17% - to $ 70.19 per barrel.
Moreover, at the auctions on November 30, quotations at some point fell to $ 67.51 per barrel.
The value became the lowest in the last three months.
“The reason for the observed dynamics was a new strain of coronavirus.
Investors fear the resumption of lockdowns in the world, and this, in turn, creates a negative background for the global economy and risks resulting in a decrease in fuel demand, "Natalya Milchakova, deputy head of the Alpari information and analytical center, explained in a conversation with RT.
The identification of a new strain with an extremely high number of mutations became known on November 24.
The detected variant of the coronavirus was named B.1.1.529, and then it was designated by the Greek letter "omicron".
Initially, the emergence of a new strain was reported in Botswana, South Africa and Hong Kong.
Note that its appearance has already become the reason for the introduction of new restrictions on transport links in a number of countries.
According to Natalia Milchakova, news of the emergence of a new strain of COVID-19 negatively affected the financial markets.
Against the background of heightened concerns about the prospects for the global economy, players began to more actively withdraw money from risky assets, including ruble ones.
Such actions of investors put additional pressure on the Russian currency.
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© Jae C. Hong
Experts believe that in December the situation with the pandemic and oil prices will continue to play a decisive role for the dynamics of the ruble.
Note that now Brent energy raw materials are traded near $ 71 per barrel.
However, analysts do not exclude the likelihood of another decline in quotations.
“If the new strain of coronavirus turns out to be more dangerous, it will put pressure on all commodities.
As a result, the price of a barrel of Brent may drop to the range of $ 50-65, "Dmitry Babin, expert on the stock market BCS World of Investments, suggested in a conversation with RT.
However, the actions of the countries participating in the OPEC + agreement can keep oil prices from a sharp drop, experts are sure.
As a reminder, as part of the deal, 23 oil-producing countries, including Russia, jointly control the production of raw materials to achieve a balance between supply and demand in the global hydrocarbon market.
Since August 2021, against the backdrop of a recovery in the global economy and an increase in global demand for raw materials, the OPEC + countries have begun to gradually increase oil production.
At the moment, the states are increasing production by 400 thousand barrels per day per month.
However, experts admit that in connection with the emergence of the omicron strain, the parties to the agreement will abandon their plans.
The parties are expected to discuss the terms of the deal at a meeting on December 2.
“The OPEC + decision will be decisive for oil prices in December.
Maintaining the current plan to increase production by 400 thousand barrels per day is likely to affect the market negatively.
At the same time, if the countries take a pause in increasing the production of raw materials, this will be able to support quotations, and during December oil prices will remain in the corridor of $ 70-80 per barrel, ”explained Natalya Milchakova.
Signal from the Fed
In the coming month, players in the foreign exchange market will closely monitor the actions of the US Federal Reserve.
On December 15, the American regulator may announce adjustments to its monetary policy, which may affect the dynamics of the dollar.
“It is possible that the Federal Reserve plans to accelerate the withdrawal of monetary stimulus due to high inflation in the US will be announced.
This will increase the likelihood of an earlier start to increase interest rates in the United States, ”said Dmitry Babin.
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In 2020, the United States Federal Reserve cut its interest rate to near zero and launched a quantitative easing program.
The Fed began printing dollars and buying up government bonds in an unlimited amount on the stock market.
Such a policy was supposed to lead to an increase in the money supply in the financial system and accelerate the economic recovery after the crisis.
But at the same time, the actions of the Federal Reserve became one of the reasons for the acceleration of inflation in the United States.
In early November 2021, the US regulator announced the beginning of the rollback of the quantitative easing program, as a result of which the dollar began to strengthen in the international market.
Experts believe that the results of the December Fed meeting may give an additional impetus to the US currency.
“With a very high probability, the current corridor of interest rates in the US will remain unchanged.
More important for the market will be the comments of FRS Chairman Jerome Powell regarding the future monetary policy.
If he declares that the new strain of coronavirus is not capable of changing the Fed's plans to wind down the quantitative easing program, the dollar could accelerate growth, "said Natalya Milchakova.
Support factors
According to the analyst of FG Finam Andrey Maslov, the actions of the Central Bank may provide support to the Russian currency in December.
Note that in order to fight inflation, the Central Bank has been actively raising the key rate in recent months and in October raised it to 7.5% per annum.
In addition to restraining consumer prices, the regulator's policy makes investing in ruble-denominated assets more attractive to investors.
By increasing the interest rate, the yield of federal loan bonds (OFZ) increases.
As a result, an additional inflow of investments into the OFZ market should have a positive effect on the dynamics of the national currency, experts are sure.
The next meeting of the Board of Directors of the Central Bank is scheduled for December 17.
At the same time, during its final meeting in 2021, the top management of the regulator may increase the rate to 8.5% per annum.
“The Chairman of the Central Bank Elvira Nabiullina recently announced that decisive measures are required to fight inflation.
Against this background, many analysts expect an increase in the interest rate by one percentage point at once based on the results of the December meeting, ”said Andrey Maslov in an interview with RT.
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In addition, a decrease in geopolitical risks can play in favor of the ruble, Dmitry Babin believes.
Investors are optimistic about the proposed talks between Vladimir Putin and Joe Biden, he said.
“The other day, the Foreign Ministry announced the continuation of preparations for the online summit of the presidents of Russia and the United States.
Although the exact date of the event is unknown, as well as the fact that it will take place at all, it still testifies to the desire to reduce geopolitical tensions, "Babin explained.
According to Andrey Maslov's forecast, under the current conditions, by the end of the year the dollar exchange rate may fluctuate in the range of 72-76 rubles, and the euro exchange rate - around 82-86 rubles.
At the same time, according to Alexander Osin, analyst of the trade operations department at Freedom Finance Investment Company, the values may vary within wider boundaries.
“Under the most likely scenario at the end of the year, we forecast a corridor of 71.7-79.3 rubles per dollar and 82.4-87.1 rubles per euro,” Osin suggested in a conversation with RT.