On Tuesday, December 20, trading on the Moscow Exchange is accompanied by a weakening of the Russian currency.
In the first half of the day, the dollar and euro rates rose by 2.7% to 69.56 and 74.03 rubles, respectively.
The last time similar values could be observed on May 11.
The national currency is noticeably depreciating for the second day in a row.
One of the main reasons for the observed dynamics was the decline in oil prices, Sergey Suverov, investment strategist at Arikapital Management Company, shared in an interview with RT.
“It's all about the new Western sanctions against Russia.
Although the restrictions do not directly affect the financial sector, as a result of the introduction of a price ceiling on Russian oil, the discount on our raw materials to other brands has increased.
Therefore, the supply of foreign currency on the market has decreased,” Suverov explained.
Recall, on December 5, the G7 countries (USA, Canada, France, Germany, Italy, Japan, Great Britain), the European Union and Australia banned their companies from insuring and transporting oil from Russia by sea to third countries at a price above $60 per barrel.
From February 5, 2023, the relevant restrictions should also apply to petroleum products.
At the moment, Russia is preparing countermeasures in response to the decision of the West.
Moreover, earlier the country's authorities have repeatedly stressed that they will not supply energy to those states that join the price ceiling.
Against this background, Moscow continues to reorient hydrocarbon exports to the East, but is forced to provide discounts to its customers.
According to the latest estimates of the Russian Ministry of Finance, a barrel of Russian Urals oil is currently selling for about $57.49, although back in November it was trading at $66.47.
At the same time, world oil prices remain significantly higher, although they also sank over the past few weeks.
Thus, since the beginning of December, oil of the benchmark Brent brand on the ICE exchange in London has fallen in price by about $5 and now costs about $80 per barrel.
“The imposition of an embargo and a price ceiling on Russian oil coincided with a fall in global hydrocarbon prices due to a worsening outlook for the global economy.
An extended period of low prices, or an additional strong decline, could result in a sustained loss of income for exporters.
Escalating geopolitical tensions and tightening sanctions worsen the prospects for Russian exports and mean a faster contraction in the trade balance, putting pressure on the ruble,” Central Bank Governor Elvira Nabiullina said on December 16.
Under the conditions of external restrictions, Russia may reduce oil production in 2023, Natalia Milchakova, a leading analyst at Freedom Finance Global, shared in an interview with RT.
In her opinion, the decline in production will be from 400 thousand to 1 million barrels per day, which may exacerbate the shortage of raw materials in the global market.
In this case, oil prices in the world will be able to again overcome the bar of $ 100 per barrel, the RT interlocutor did not rule out.
Nevertheless, in the near future, commodity quotes will continue to remain under pressure.
However, the current weakening of the ruble will allow companies and the budget to partially compensate for monetary losses from oil prices.
“The fall of the ruble is beneficial for exporters, especially since many of them now have the task of reorienting supplies from the West to the East, which means that costs will also grow.
In addition, with a decrease in oil prices, the weakening of the national currency allows the budget not to lose revenues from the export of hydrocarbons in ruble terms.
At the same time, the cheap ruble is unprofitable for ordinary Russians and businesses focused on the domestic market, as income in rubles is depreciating, ”explained Natalia Milchakova.
The determining role for the ruble is still played by the imbalance of supply and demand in the Russian foreign exchange market, analysts are sure.
Exported dollars and euros continue to flow into Russia in relatively high volumes.
At the same time, the interest of companies in foreign banknotes remains relatively low, since imports have not yet been able to fully recover after the spring collapse.
Thus, according to the Central Bank, from January to November 2022, the current account surplus of Russia's balance of payments (the difference between the inflow of foreign currency from abroad and its outflow outside the country) amounted to $225.7 billion. This is approximately 2.1 times more than for the same period in 2021.
At the same time, the state of affairs in Russia's foreign trade began to change gradually.
If in the first quarter of 2022 the country's balance of payments account surplus reached $69.8 billion, and in the second quarter it increased to $76.7 billion, then in the third quarter the figure, on the contrary, dropped to $51.2 billion.
Such dynamics is largely due to the gradual recovery of imports and the decline in exports as a result of cheaper oil.
According to the experts of the United Nations Conference on Trade and Development (UNCTAD), from July to September, the export of Russian products abroad decreased by 13% compared with April-July.
Meanwhile, deliveries of foreign goods to Russia increased by 26%.
“Although the balance of payments surplus has begun to decline, its size is still impressive, which supports the ruble.
In addition, in recent months, the Bank of Russia has stopped cutting its rate, and now this indicator remains relatively high compared to many countries.
This factor is also positive for the ruble, ”Sergey Suverov told RT.
Note that the monetary policy of the Central Bank directly affects the yield of federal loan bonds (OFZ).
Since the key rate of the Central Bank is now higher than in a number of other states, investing money in ruble assets is more profitable for investors.
As a result, the influx of investments into the OFZ market somewhat hinders the weakening of the ruble.
© Mikhail Voskresensky
Moreover, at the end of December, the tax period may play in favor of the ruble, Sergey Suverov is sure.
At this time, exporting companies traditionally sell foreign exchange earnings and buy rubles to pay taxes.
As Mikhail Zeltser, an expert on the BCS World of Investments stock market, suggested in an interview with RT, exchange rates have already made a major jump and now there is no reason to continue the same active weakening of the ruble.
Against this background, until the end of the year, the value of the dollar and the euro on the Moscow Exchange will remain close to 70 and 74 rubles, respectively, the analyst believes.
Sergey Suverov adheres to a similar assessment.
In turn, Natalya Milchakova does not exclude the possibility of some strengthening of the national currency before the New Year.
“It is noteworthy that even taking into account the weakening observed in recent days, the ruble is worth more than a year ago.
There is potential for cheaper prices to the levels of early 2022, but the tax period may prevent this.
So, by the end of December, rates can roll back quite a lot and even drop to 62–64 rubles per dollar and 64–66 rubles per euro,” Milchakova concluded.