After Prigozhin’s “camp on Moscow”, the dollar and the euro began to grow steadily against the ruble. As of June 28, the US currency traded at 86 rubles, the European at 94. Russian media learned from experts why the ruble is falling and what rate to expect in the near future.
During Wagner PMC’s march to Moscow, Russian banks sharply raised exchange rates. Dollars were sold at 94.5-97.5 rubles, euros – at 104-106 rubles. Moreover, on the eve of currency trading on the Moscow Stock Exchange, it offered 84.7 rubles for one dollar and 92.4 rubles for one euro. After Yevgeny Prigozhin abandoned his plans, rates rebounded a few rubles, but gradually began to strengthen again. So, as of June 28, the dollar was trading at 86 rubles, the euro at 94.
Of course, the worrying events of June 24 had a negative effect on ruble assets, Alexander Bakhtin, investment strategist at BCS Mir Investments, told Russian media. “However, in the absence of non-residents and given the success of the crisis, the sale of the ruble did not develop. Nevertheless, in the coming days the ruble may continue to weaken against the background of the end of the fiscal period and the uncertainty of oil prices,” the expert believes.
The base ruble exchange rate is based on the balance between the inflow of foreign currency from exporters and domestic demand, including from importers, Bakhtin added.
“Export earnings declined after the drop in oil prices in the middle of spring, since then oil prices have been moving at a relatively low level. The geopolitical discount on raw materials sold by the Russian Federation is also affecting. At the same time, the physical demand for foreign currency from Russians traveling abroad added to the demand from importers in the summer,” he added.
The rebellion is over and to some extent the excess demand for cash has calmed down, Alexander Abramov, a professor in the School of Finance at the HSE’s Faculty of Economics, told Russian media. According to him, now the main question is whether the Central Bank will raise the key rate.
“What is the central bank afraid of? That public spending is large, at the expense of public spending, defense industry production is largely funded. This production does not produce consumer goods, but wages and profits are paid on them. Therefore, as Nabiullina explained not so long ago, we have an increase in effective demand, but our supply of goods is limited, which can lead to an increase in inflation,” Abramov explained. .
The Central Bank’s statements that it is likely to raise the rate also affect the weakening of the ruble, Abramov added.
Should I wait for the dollar at 90?
Experts interviewed by Russian media believe that the dollar is unlikely to break the ceiling of 90 rubles. An overpriced dollar can have a significant pro-inflationary effect, Bakhtin believes, so financial authorities are likely to take appropriate action.
The government and the Central Bank have enough strength to ensure the stability of the ruble, Abramov believes.
“You can ask exporters to sell more currency, you can ask some buyers to buy less and, of course, raise the rate. This will limit the flow of rubles to the foreign exchange market. I think there is interest in not giving rise to oppositional expectations of a weakening ruble,” Abramov said.
Traditionally, domestic political events have little effect on the stock market and the foreign exchange market in Russia, Abramov added.
“You see, to have a big impact, market participants have to be convinced that something will happen that will completely change Nabiullina’s restrictive monetary policy. It’s unlikely. Therefore, some changes and some sort of internal turmoil. .. No, this is not the main factor affecting the ruble exchange rate,” he concluded.
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