How the ruble was tempered: what caused a new round of strengthening the national currency, by Rosa Almakunova for Izvestia. 20.05.2022.
Experts expect that in order to increase budget revenues, the Central Bank may go for early removal of restrictions.
The Bank of Russia may agree to an early removal of restrictions in order to balance the exchange rate and return it to the equilibrium level of 75 rubles / $, according to analysts interviewed by Izvestia. On May 20, the national currency strengthened against the American one to 57.07 rubles - the maximum since April 2018, and against the European one - to a record 59.02 rubles since 2017 . This is due to the excess supply of currency over demand. As well as the approaching tax period for exporters and the transition to paying for Russian gas in rubles, experts explained. According to their forecasts, if the current restrictions continue, in the coming months the exchange rate may drop to the range of 50–55 rubles/$.
Again a record
On Friday, during trading on the Moscow Exchange, the Russian currency immediately strengthened to 57.07 rubles / $, which was a new record since April 2018. At the same time, the euro for the first time since April 2017 fell to 59.02 rubles / €. During the trading day the ruble fluctuated around the same values and by 16:40 traded at 59.92 and 62.10 respectively.
The main factor in the strengthening of the ruble is the significant sales of foreign currency by exporters before the MET payments for 600 billion rubles next week, Yury Popov, a strategist for the markets of currencies and interest rates at SberCIB Investment Research, explains: Europe's transition to the gas payment scheme for rubles also affects . The immediate reason for the decline in the dollar was the large-scale sales of the euro against the ruble , Oleg Syrovatkin, a leading analyst at Otkritie Investments, agreed. Since the European currency is declining against the Russian one, the American one should also be declining in order to keep the EUR/USD cross rate in line with external markets, he explained.
Such a sharp drawdown of currencies suggests that the situation with imports has not improved and companies have not yet found alternative ways to replace traditional logistics links . The reconfiguration of the economy will last another 12-18 months, says Sergey Grishunin, managing director of the NRA rating service.
The exchange rate of the ruble is also affected by the obligatory sale by companies of 80% of foreign exchange earnings, and high prices for raw materials , said Mikhail Vasiliev, chief analyst at Sovcombank. At the same time, the demand for the currency fell sharply due to sanctions restrictions - imports shrank, foreign investment and tourist trips abroad decreased, he added.
You can't take it off
Meanwhile, the excessive strengthening of the ruble reduces the income of Russian exporters and the budget , Mikhail Vasilyev notes. In the coming weeks, the Central Bank will rather continue to soften the rule on the mandatory sale of exporters' proceeds and currency restrictions for residents , but this may not be enough to reverse the ruble, the expert admitted. Now in Russia there are restrictions of the Central Bank on the sale of cash dollars and euros to individuals, except for those received at the cash desks of banks since April 9. This ban also applied to other cash currencies, but since May 20, the regulator has softened it with the exception of US and EU currencies. At the same time, the limit on the export of money abroad continues to be maintained - up to $10,000 per person.
There is also a requirement for exporters to sell 80% of foreign exchange earnings. As an indulgence, the regulator allowed them to sell money no later than 60 business days from the date of crediting to accounts in authorized banks.
According to the chief analyst of Sovcombank, no easing of measures is expected for non-residents in the coming quarters. At the same time, the Moscow Exchange announced its intention to launch a separate trading mode for them at the end of June - now they cannot freely make transactions with securities. It is assumed that the ban on the withdrawal of funds abroad will continue.
Cancellation of the rules for the sale or withdrawal of cash dollars and euros may not have any effect , since it no longer depends on the Central Bank, but on the intentions of the EU and the USA to limit any supply of their cash currency to Russia, the director of the department for work agreed with shares of Sistema Capital Management Company Konstantin Asaturov. However, even if the regulator takes such a step, the banks simply may not have cash, he added.
Judging by the statements of the head of the Central Bank following the results of the April meeting, the removal of restrictions on cash dollars and euros is hardly possible before September. However, the rapid strengthening of the ruble may force the regulator to take such measures ahead of plans , - Vladimir Evstifeev, head of the analytical department of Zenit, admitted.
The Bank of Russia is pursuing a prudent conservative policy towards capital controls as the sanctions turbulence is far from over , NRA's Sergei Grishunin said. There also remains high uncertainty regarding the payment of external debt and the blocking of gas and oil exports, which makes early removal of restrictions on the movement of capital unlikely, he concluded.
Prospects and risks
In the coming weeks , the strengthening of the ruble may stop , Yuri Popov from Sberbank believes. The fact is that in June three-month deposits opened in March at high rates will be repaid . Also, taking into account the recent strengthening of the ruble , the demand for currency from individuals may rise sharply , which will put some pressure on the exchange rate, he said, adding that in March, against the backdrop of a sharp weakening of the ruble, individuals sold foreign currency for 570 billion rubles in net terms and in June demand it can be comparable.
According to the expert, after the increased demand of individuals for currency is saturated - closer to the second half of June, the strengthening of the ruble may resume , especially if exports from Russia remain high. It is possible that under these conditions, at the end of the second quarter and at the beginning of the third quarter, the ruble may strengthen to levels of about 50 per dollar.
The Russian currency may continue to grow in the next few months and gradually move into the range of 50-55 against the dollar and 52-57 against the euro , predicted Mikhail Vasiliev. In the meantime, its strengthening helps to reduce the cost of imported goods, slow down inflation, the stable control of which makes it possible to reduce the key rate, make money cheaper and support economic growth, the analyst noted. Also, a strong ruble is beneficial for importers and consumers, as it makes foreign goods cheaper and more accessible, he added.
According to Vladimir Evstifeev, the dollar exchange rate at the level of 75 rubles looks like an equilibrium in the current situation . The forecast for June for the pair USD/RUB is 65–67 rubles, EUR/RUB is 68–70, he noted. Closer to autumn, the national currency will be higher than the current levels, says Alexander Potavin, an analyst at the Finam group. According to the forecast of the Ministry of Economy, the average dollar exchange rate by the end of 2022 is expected to be at the level of 76 rubles.