On Monday, October 3, the Russian currency shows mixed dynamics on the Moscow Exchange.

During the opening of trading, the dollar fell by 0.28% to 58.29 rubles, while the euro rose by 0.75% to 57.12 rubles.

Both indicators are moving in opposite directions.

in the first trading session in October after a noticeable decline in September.

So, for the first month of autumn, the dollar exchange rate on the Moscow Exchange fell by 3%, to 58.45 rubles, and the euro exchange rate, by 6.2%, to 56.7 rubles.

At the same time, at a certain point, the value of the American currency for the first time since July fell to 53.23 rubles, and the European currency fell to 50.73 rubles, the lowest level in the last eight years.

It should be noted that for several weeks in a row, the euro has been cheaper than the dollar on the world and Russian markets.

So, over the past month, the exchange rate of the European currency against the American one in international trading fell from $1.0052 to $0.98 per €1, and on September 28, the value briefly approached $0.95.

The last time a similar situation could be observed back in 2002.

The record weakening of the euro against the dollar over the past 20 years is largely due to the worsening economic situation in the eurozone against the backdrop of the energy crisis.

The observed trend may continue in the foreseeable future, specialists of the American Institute of International Finance (IIF) are sure.

“The energy price shock led to a sharp deterioration in trade balances in European countries, including the UK ... Although the euro and the British pound have already fallen significantly, we believe that the decline will continue until these currencies find new fair levels for themselves,” — according to the IIF study.

In standby

In addition to the depreciation of the euro in the world, the ruble is still supported by the imbalance of supply and demand in the Russian foreign exchange market.

Oleg Syrovatkin, a leading analyst at the Otkritie Investments department of global research, spoke about this in an interview with RT.

Currently, dollars and euros received from exports continue to flow into Russia in significant volumes, including due to high energy prices.

Meanwhile, business demand for these currencies is still low, as imports have not yet recovered from the spring collapse.

Moreover, recently many Russian banks and companies have been actively selling their available dollars and euros due to possible sanctions risks.

“The threat of new sanctions by the West against Moscow is forcing Russian investors and companies to actively get rid of euros and dollars, as market participants and businesses fear freezing their assets in these currencies.

Against this background, we see an increase in trading activity in the yuan, where capital flows,” Oleg Syrovatkin noted.

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According to the specialist, in October the dynamics of the trade balance and geopolitical factors will remain the determining drivers for the ruble exchange rate.

Thus, the predominance of exports over imports and the refusal of businesses from dollars and euros will support the national currency, Syrovatkin believes.

Experts do not rule out that in the near future sales of European and American currencies by businesses may intensify, as market players fear the introduction of Western restrictions against the National Clearing Center (NCC).

The organization acts as an intermediary in foreign exchange transactions on the stock exchange.

According to analysts, if restrictions are introduced in relation to the NCC, exchange trading in dollars and euros in Russia will become impossible.

However, even with such a development of events, the foreign exchange market in the country will continue to operate, but in an over-the-counter format, says Yevgeny Mironyuk, an expert at BCS World Investments.

As the analyst explained, in this case, the dollar and euro rates will be determined by banks based on supply and demand from customers, but the difference between the indicators can seriously increase.

“Nevertheless, we believe that sanctions against the NCC are unlikely.

The Moscow Exchange and its structures are to some extent protected from sanctions by the established requirements for paying for gas in rubles.

Since buyers of raw materials from unfriendly countries must pay for fuel in Russian currency, which must be bought on the Moscow Exchange with the participation of the NCC, sanctions against the clearing center will be tantamount to stopping gas supplies to Europe,” explained Evgeny Mironyuk.

Good for the budget

Another key factor for the ruble could be the restart of the budget rule, experts say.

Previously, within the framework of this mechanism, the state directed oil and gas windfall profits (money received from the sale of oil at a price higher than $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.

In early March 2022, the Ministry of Finance suspended the budget rule due to 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.

However, already in the second half of spring, the situation in the economy began to gradually stabilize, and the ruble strengthened to a record, which began to negatively affect budget revenues.

Against this background, the authorities thought about a possible restart of the budget rule for some weakening of the national currency.

“A return to the fiscal rule has been expected since August, but so far this has not happened.

According to the Ministry of Finance, the updated mechanism can start working only in 2023.

If this does happen in October, the ruble may weaken.

At the same time, the absence of a budget rule, along with the continued preservation of currency restrictions, will, on the contrary, contribute to the strengthening of the national currency, ”Natalia Milchakova, a leading analyst at Freedom Finance Global, told RT.

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According to Yevgeny Mironyuk, as the demand for Russian and Chinese currencies from business increases, in early October, the dollar and euro rates will tend to the level of 50 rubles.

In the future, the situation may change after the specifics of new Western sanctions appear.

According to Natalia Milchakova, in the second half of October, the dollar and euro rates may enter the range of 56-63 rubles, and by the end of autumn rise to 66 rubles.

In turn, Oleg Syrovatkin believes that by the end of 2022, the value of the American and European currencies will reach approximately 64 rubles, but under certain circumstances it can grow to 70 rubles.