Ruble
Mikhail Vasiliev, chief analyst at Sovcombank:
– We expect that next week the ruble will continue to consolidate in the range of 72-74 against the dollar and 82-84 against the euro.
The dynamics of oil prices, the movement of the American currency on the global market and the dynamics of portfolio investments in Russian assets will remain the main factors for the ruble exchange rate.
Emerging market currencies, including the ruble, are under pressure due to the strengthening of the dollar in the world. The DXY dollar index surpassed 95 and renewed its annual high.
The dollar was supported by the growing fifth wave of COVID-19 in the world and expectations of a faster tightening of the Fed’s monetary policy to curb inflation. Annual inflation in the US in October jumped to a 30-year high of 6.2% against the Fed’s 2% target.
Acceleration of inflation was observed for a wide range of goods and services, which, together with rising inflationary expectations, led to an increase in social and political pressure on the Fed. The American Central Bank is likely to accelerate the reduction of the quantitative easing program from the new year and will quickly move to raising the interest rate to curb inflation.
For the first time, the market began to lay down already three Fed rate hikes in the next year. Expectations of a decrease in the inflow of cheap dollar liquidity and a tightening of financial conditions in the world have a negative impact on risky assets, including the debt and foreign exchange markets of developing countries.
Additional pressure on the ruble is exerted by the increased volume of purchases of foreign currency by the RF Ministry of Finance within the framework of the budget rule. From November 9 to December 6, the department increased the daily volume of foreign currency purchases by 72%, to a record 25.9 billion rubles, or about $ 360 million. In total, $ 7.2 billion will be withdrawn from the foreign exchange market in a month.
Finally, the increase in geopolitical risks due to the situation in Ukraine and the situation around Belarus worsened the attitude of international investors towards Russian assets.
The ruble will be supported by the November tax period starting this week. According to a Reuters poll, the total amount of taxes this month will amount to 2.1 trillion rubles. The sale of foreign currency earnings by exporters for settlements with the budget will have a positive impact on the ruble.
Oil
Vladimir Evstifeev, head of the analytical department of the bank “Zenith”:
– The main pressure on the oil market comes from the data on high inflation in the US in October, which provoke a global strengthening of the dollar and expectations of an earlier increase in the base interest rate by the Fed. In addition, OPEC + downgraded its forecast for global oil demand for the current quarter, but still expects a deficit in 2022. Realization comes to the market that the peak of the recovery growth of the world economy has passed and further we will expect more modest growth rates of demand. There is also positive news, such as an increase in the number of air travel in the world, as well as the lack of US reaction to the insufficiently active increase in production from OPEC +. Recovery of oil quotes to recent highs will be complicated by the strong position of the dollar in the world. Thus, the prerequisites for finding oil prices in the range of $ 80-83 per barrel of Brent grade remain.
Stock exchange
Alexander Bakhtin, investment strategist “BCS World of Investments”:
– Last week, a number of reasons led to increased volatility in the markets. These are consumer prices in the United States, which unexpectedly soared to 30-year highs (6.2%) in October, which threatens faster hikes in the Fed’s rates, and the persistence of serious debt problems among the largest Chinese developers, and the still high rates of coronavirus morbidity in the world. … An additional negative for the Russian market towards the end of the week was the decline in commodity prices. Oil corrected downward on the back of local risk off, as well as deteriorating demand forecasts from OPEC and EIA. Another deterrent for buyers of ruble assets is the growing geopolitical tension due to the situation on the Belarusian-Polish border.
In the coming week, the vector of movement of Russian stock exchange indices will mainly depend on general market sentiments, the dynamics of oil prices, and the degree of tension in the geopolitical background. Bidders will continue to monitor key economic statistics. An important block of data on China for October (November 15) – investment in fixed assets, industrial production, retail sales, unemployment rate.
In the US, the reporting season is coming to an end. The results for the third quarter next week will be presented by NVIDIA Corp., Alibaba, Walmart, Cisco, Baidu, Tyson Foods and others. In Russia, on November 15-19, financial reports will be presented by Rusagro, Ozon, MTS, Cherkizovo, Bank Saint Petersburg, etc. …
According to our estimates, the Mosbirzh index may move in the next week within the range of 4050-4250 points, the RTS index – 1720-1890 points.
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