On Monday, January 24, the Russian currency weakens on the Moscow Exchange.

During trading, the dollar rose by 2.5% to 79.41 rubles.

The last time a similar indicator could be observed was in November 2020.

At the same time, the euro exchange rate rose by 2.2% and for the first time since June 2021 exceeded 89.76 rubles.

The official exchange rate of the Central Bank on January 25 is set at 77.36 rubles per dollar and 87.59 rubles per euro.

The Russian stock market is also showing negative dynamics.

During the trading session, the Moscow Exchange index fell by more than 8.1% to 3159 points.

The value was the lowest since December 2020.

The RTS index fell by 10% and for the first time since November 2020 reached 1261 points, while the Russian government bond index (RGBI) fell by 1.2% to 127.81 points, the lowest level since March 2016.

Financial market participants fear geopolitical risks and withdraw money from Russian assets.

This is how the situation on the stock exchange was explained by Natalya Milchakova, deputy head of the Alpari information and analytical center.

“There is news that the United States is ready to send up to 50,000 troops to the countries of Eastern Europe and at the same time evacuate diplomats from Kiev.

In addition, market participants are reacting to the threat of new anti-Russian sanctions.

Most likely, until Washington responds to Moscow's request for security guarantees, exchange turbulence will continue, ”Milchakova suggested in an interview with RT.

Recall that on December 17, the Russian Foreign Ministry published draft treaties with the United States and agreements with NATO on security guarantees, which were handed over to Western colleagues.

The documents, in particular, contain provisions on NATO's refusal to further expand to the east and mutual security guarantees in Europe.

In early January 2022, Russia held a series of negotiations with the United States and NATO on these issues, but at that time the parties failed to reach specific agreements.

On January 21, a new stage of Russian-American negotiations took place - between Foreign Minister Sergei Lavrov and US Secretary of State Anthony Blinken.

During the meeting, however, an agreement was reached that this week Washington would send written responses to Moscow's proposals.

Meanwhile, on the eve of the talks between Lavrov and Blinken, US President Joe Biden once again announced Russia's allegedly impending "invasion" of Ukraine and threatened Moscow with "large-scale" sanctions and consequences.

In particular, the head of the White House said that Russian banks would not be able to conduct transactions in dollars.

At the same time, such a decision will have a negative impact on the United States and Europe, Biden added.

However, as Finance Minister Anton Siluanov noted earlier, the Russian economy will survive even if the sanctions discussed in the West are introduced.

According to the head of the Ministry of Finance, the country has created a safety cushion in the form of the National Welfare Fund (NWF), which should provide the necessary protection.

A similar point of view is shared by Natalya Milchakova.

“All these fears of sanctions are caused not so much by the restrictions themselves as by their expectations.

This was the case in 2018, and in other years, when we were threatened with such measures.

In general, the Russian currency now looks oversold due to sanctions risks, and a fair exchange rate should be around 60-64 rubles per dollar.

I think that with the appearance of some positive news, we will see some course correction,” Milchakova said.

To help the ruble

Due to the increased fluctuations in exchange rates, the Central Bank on Monday announced the suspension of foreign currency purchases under the budget rule.

As explained in the Central Bank, the decision should increase the predictability of the actions of the monetary authorities and reduce the volatility of financial markets.

“The Bank of Russia monitors the situation on the financial market and has enough tools to prevent threats to financial stability,” the press service of the regulator said.

After the decision of the Central Bank, the dollar and euro exchange rates on the Moscow Exchange briefly dropped to 78.3 and 88.5 rubles, respectively.

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In addition, the weakening of the ruble is constrained by relatively high oil prices, Alexander Potavin, an analyst at FG Finam, said in an interview with RT.

According to the analytical agency Argus, on January 19, the cost of Russian Urals brand of energy rose above $90 per barrel.

This has happened for the first time since October 2014.

“According to the budget rule of Russia, all excess profits received from the sale of Urals oil are sent to the NWF.

Surplus profits are revenues to the budget (duties, taxes, fees) from the sale of oil at a price above $44.2 per barrel.

That is, the more oil costs, the more money goes into this state piggy bank, which serves as a reliable reserve in case of force majeure, ”Potavin explained.

According to him, by the end of January, the tax period may play in favor of the ruble.

At this time, exporting companies will traditionally sell foreign currency and buy rubles to pay taxes.

“In January, tax payments by companies should amount to about 2.35 trillion rubles.

At the same time, the peak of the tax period will come on January 25-28 - about 1.6 trillion rubles should be paid these days, ”Potavin added.

At the same time, geopolitical factors will continue to play a decisive role for the dynamics of the national currency.

Alexander Kopytov, an analyst at 8848 Invest, shared this opinion in a conversation with RT.

“If there are new hitches in further negotiations between Russia and the United States, the dollar exchange rate may further increase - up to 82 rubles.

If the situation begins to stabilize, the rate will win back the growing oil and go to the level of 73 rubles per dollar, ”Kopytov noted.