What factors are currently affecting the national currency?
The future of the ruble, as always, attracts attention, while remaining uncertain. And yet, let’s try to look into this future.
Let’s simplify the task right away by limiting ourselves to the ruble-dollar pair. And here we emphasize: since pair skating involves two participants, it means that you should take into account both the factors affecting the ruble and the factors affecting the dollar.
With the ruble, everything is relatively familiar. There is the general economic situation, there is the dynamics of oil prices and there is geopolitics, which in modern conditions is expressed in the juggling of sanctions. The general economic situation, in turn, has two sides: the situation and prospects of the Russian and world economies. Let’s start with these sides.
The Russian economy is not yet happy, but the outlook is definitely bright. Already because the second quarter of 2020 yielded a result of minus 8% of GDP, against which there can be no doubt about the success of the second quarter of this year. The same base of comparison should somewhat cool the ardor of those who, perhaps, will be inclined to blow too loudly into fanfare. There will be growth, but it is clear that last year’s fall will not be restored soon.
What is the conclusion for the ruble? Recovery growth will speak in its favor. But speak softly. The return of the Central Bank to the policy of raising the key rate is unlikely to seriously strengthen the ruble. Much louder for the ruble is the echo of what is happening in the world economy. In the long term, a fairly fast (faster than in Russia) recovery of the world economy is expected. This means that there will be an increase in demand for Russian raw materials and, above all, oil exports. This means that this factor plays on the side of the growth of the ruble.
But there is one important clarification. The US economy is picking up speed. This means that it is time to turn to the factors that affect the dollar. The growth of the US economy itself is strengthening it, but this is not all. The forecasts already heard by the market about the coming gradual curtailment of the super-soft monetary policy (when more and more new money is thrown into the markets, which, in particular, leads to low interest rates on loans and deposits) are becoming more and more real due to the economic growth. The consequence is a further strengthening of the dollar, capital outflow into American assets and a depreciation of the ruble, as well as the national currencies of other developing countries.
Which of the factors related to the global economy will pull the rope over itself? While it can be assumed that they are able to balance each other.
There is also a pandemic factor. The dynamics of cases directly affects the growth rates of the world economy (both Russian and American). The more cases, the greater the risks of a decrease in economic growth, demand for raw materials and oil, and, accordingly, the ruble exchange rate.
But here, too, everything is not so simple. Let’s turn to the near-term prospects for the ruble exchange rate. It is also influenced by such a seasonal factor as the demand of Russians for foreign currency during the pre-holiday period. The pandemic and the closure of some countries that traditionally attract Russians will reduce this demand and, with an eye on the beginning of summer, will strengthen the ruble.
An absolutely unambiguous factor is sanctions. They or the threat of their tightening always negatively affect the ruble exchange rate. Now the markets, as they say, have already “won back” the last package of anti-Russian sanctions. And in the short term, a new wave should not be expected.
Based on this premise, the final forecasts of the ruble exchange rate are as follows: according to Maxim Petronevich, senior economist at Otkritie Research, by June, we can expect some strengthening of the ruble against the dollar to about 74 rubles per dollar. There are also attempts to look further. The chief analyst of Sovcombank, Mikhail Vasilyev, believes that in the baseline scenario, by the end of 2021, the ruble can be seen in the range of 75-77 to the dollar. At the same time, the basic scenario assumes that the upcoming summit of the presidents of Russia and the United States signals that a new roll of anti-Russian sanctions will not follow.
To such a basic scenario, there are also basic directors!
Newspaper headline:
The ruble is determined with the exchange rate for the summer
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