For the benefit of the budget: how the dollar and euro rates can change in August

On Monday, August 1, the Russian currency weakens on the Moscow Exchange.

At the beginning of trading, the dollar rose by 1.4% to 62.49 rubles, and the euro by almost 2% to 63.7 rubles.

The national currency is moderately depreciating in the first auctions of August after a noticeable weakening in July.

So, for the second month of summer, the dollar exchange rate on the Moscow Exchange increased by 19.77% - to 61.62 rubles, and the euro - by 16.36%, to 62.47 rubles, although at some point the values ​​briefly dropped to 51.1 and 53.32 rubles, respectively.

As in previous months, the ruble still continues to be supported by an imbalance of supply and demand in the Russian foreign exchange market.

Alexander Dzhioev, an analyst at Alfa Capital Management Company, spoke about this in an interview with RT.

“Due to high world prices for raw materials, in particular for energy resources, a large amount of foreign currency is steadily coming into the country from exports.

On the other hand, the volume of imports, and hence the demand for foreign currency, fell noticeably due to sanctions, logistical difficulties, and problems with paying for goods and services,” Dzhioev explained.

Nevertheless, as experts expect, in the next month this disproportion between the volume and the supply of currency will gradually come to naught, which will put pressure on the ruble.

For example, rates have already reacted to the reduction in gas exports from Russia to Europe.

Recall that in the middle of the month, Gazprom suspended the pumping of raw materials to the EU via Nord Stream for ten days to carry out scheduled repairs to the pipeline.

At the same time, after the resumption of the operation of the main line, the volume of deliveries decreased to a minimum level due to problems with the return of the turbine for the gas pipeline from Canada.

As Mikhail Zeltser, an expert on the BCS World of Investments stock market, suggested in a conversation with RT, in the future, the dollar and euro rates are likely to continue to grow, as Russian exports as a whole will be corrected, and imports will recover after the spring collapse.

Elvira Nabiullina, chairman of the Central Bank, also announced the resumption of supplies of foreign goods to the country.

“The dynamics of imports is in line with our expectations.

After a significant decline, this figure began to recover.

Consumer imports are mainly increasing due to the establishment of new supply routes, ”the head of the Central Bank noted.

• © Press Service of the Bank of Russia

In addition, a noticeable increase in the number of transactions in yuan on the Moscow Exchange plays in favor of the ruble’s depreciation, said Andrey Kochetkov, a leading analyst at Otkritie Investments’ global research department.

In the second half of July, the Chinese currency for the first time was able to overtake the European one in terms of trading volumes for a short time.

Such dynamics may be associated with purchases by the Ministry of Finance or the formation of Central Bank reserves in yuan, the expert believes.

“In addition, in July RUSAL placed bonds in yuan for the first time.

It is likely that interest in such instruments on the part of investors and borrowers will increase.

Accordingly, we are again talking about an increase in liquidity in the Chinese currency, through which pressure will be exerted on the ruble,” Kochetkov added.

The soft monetary policy of the Central Bank will also play against the ruble, Mikhail Zeltser believes.

Recall that in July, the Central Bank lowered its key rate to 8% per annum, the lowest level since the end of 2021.

The actions of the regulator make investments in ruble assets less attractive and profitable for investors, so players are beginning to shift money to other currencies in emerging markets.

Under the new rules

However, the restart of the budget rule in Russia may become the determining factor for the ruble before the end of summer, according to experts interviewed by RT.

Earlier, President Vladimir Putin instructed the government to prepare proposals for adjusting this mechanism.

Analysts do not rule out that the innovations may come into force in August.

• RIA News

• © Roman Galkin

Recall that at the beginning of 2022, in accordance with the budget rule, the state sent oil and gas super-profits (money received from the sale of oil at a price above $44.2 per barrel) not for current spending of the treasury, but for the purchase of foreign currency to the National Welfare Fund (NWF) .

The authorities have used this practice over the past years to protect the budget and the ruble from fluctuations in oil prices.

However, in early March, the Ministry of Finance suspended the budget rule amid large-scale Western sanctions, the blocking of almost half of Russia's gold and foreign exchange reserves, and a sharp depreciation of the ruble.

At that moment, it was assumed that all oil and gas revenues that would have previously gone to the NWF would now be spent on supporting the economy.

Nevertheless, already in the second half of spring, the economic situation in Russia began to gradually stabilize, and the ruble managed not only to fully win back sanctions losses, but also to rise in price against the dollar and the euro to a record high.

Excessive strengthening of the national currency began to negatively affect the income of exporters and the state.

Under these conditions, the Russian authorities decided to resume the work of the budget rule, but with some changes.

“The Ministry of Finance used to put excess profits from oil and gas into foreign currency, into the National Welfare Fund, and so on, within the framework of the budget rule.

Now foreign currency is toxic, but we are ready to do it (invest money. -

) in order to influence the exchange rate, in the currency of friendly countries.

And through the currency of friendly countries, through cross-rates against the dollar and the euro, it will be possible to regulate the value of the dollar and the euro against the ruble through such a ratio, ”said Anton Siluanov, Finance Minister at the end of June.

According to him, the Ministry of Finance is ready to donate part of the budget expenditures to carry out foreign exchange interventions.

However, the final version of the budget rule has not yet been officially presented.

“According to preliminary information, the Ministry of Finance now proposes to buy foreign currency for oil revenues at its price above $60 per barrel.

In addition, it is proposed to fix the basic oil and gas revenues of the budget for the next three years at the same level - 7.5 trillion rubles.

Expectations that the modified budget rule may work soon are already contributing to the weakening of the ruble, ”said Alexander Potavin, an analyst at FG Finam, to RT.

According to Andrei Kochetkov, if the budget rule is launched in August, the dollar and euro rates may rise to the level of 65-70 rubles.

At the same time, if the Ministry of Finance does not resume operations for the purchase of foreign currency in the NWF, the rates will remain close to 55-60 rubles, the specialist believes.

In turn, Alexander Potavin does not exclude that in the near future the value of the dollar and the euro will fluctuate in a wide range - 57-65 rubles - and only by the end of the year will return to the range of 70-75 rubles.