Who pressed ruble: Trump, Rosneft or holidaymakers?

Experts about the causes of the Russian currency rate’s fall and forecasts for the nearest quarter

Who pressed ruble: Trump, Rosneft or holidaymakers? Photo: buzday.ru

The dollar and euro suddenly have started to grow in price against the ruble since the beginning of last week. The Russian currency insignificantly recovered its positions in exchange trading only on Thursday evening. Banks noticed a growing demand of the population of Russia for euro and dollar. So the Ministry of Finance of the Russian Federation announced its plans to purchase the currency at 47,6bn rubles. The volume of purchases will increase 640 times in comparison with July.

New sanctions against Russia are called as a cause of such a rise. However, Realnoe Vremya's experts say the influence of this news is not so important: practice showed the sanctions don't significantly affect the economy of the Russian Federation. The holiday season that led to a purchase of currencies by natural persons, dividend payout and their conversion and even the action of Sistema JFSC with Rosneft could also affect the rate. Realnoe Vremya tells about the causes and presents the analysts' forecasts.

  • Mikhail Poddubsky

    Mikhail Poddubsky leading analyst at Promsvyazbank

    A moderate and negative sentiment is forming concerning the ruble. On the one hand, the news background with tightened sanctions is negative. It had a local impact on the whole of group of Russian assets. The second factor is that our account balance of transactions is temporarily relatively weak in the 3 rd quarter. We think this year it will be negative at the end of the 3rd quarter. It also means that demand for the currency can grow now. In general, we see if there were an obvious tendency for growth of all the currencies of developing countries, now the majority of them shows neutral dynamics.

    We don't think it will bring to a new powerful wave of the Russian currency's fall. We can certainly reach 62 rubles per dollar at the beginning of the 3 rd season. There is likely to be stabilisation after that at current levels, give or take. If there are not a new aggravation of geopolitical risks, a new powerful wave of decrease in oil rates, we don't expect a big fall of the ruble.

  • Maksim Golovatov

    Maksim Golovatov director of BKS Premier in Kazan

    The euro-ruble couple exceeded 72 rubles in Wednesday for the first time since September last year, then it fell and maintains at 71,6-71,8. We need to analyse key factors to understand what caused such dynamics in these currencies and what a euro rate we will have at the end of the summer.

    I would point the seasonal pressure on the ruble out as domestic factors – a traditionally weak balance of payments and the population's active demand for the currency because of the tourist season is observed during this period of the year. What is more, we should consider the conversion of dividends from foreign companies that were received in rubles.

    Undoubtedly, the geopolitics affects the current dynamics of the euro and ruble. The topic of sanctions has reached a new level after imposition of another set of restrictive measures against Russia by the U.S. Congress. The new sanctions are something extraordinary, they did not become an unexpected thing for the market. Nevertheless, special information tension around them has obviously affected the moods of foreign investors and capital flows.

    We should also note that the ruble's weak period almost coincided with the euro's grow against world currencies including the U.S. dollar. Positive data on the EU's GDP in the 2 nd quarter supported the euro as well as the pricing index of manufacturers, which was more than expected. It all increases chances that the European Central Bank will start to cancel stimulating measures in the nearest future and, consequently, the euro will continue feeling quite confident in the short run.

    In addition, according to our estimates, the potential of the current growth wave of the euro and ruble is about to come to an end. A further fall of 1-1,5 rubles as maximum can be possible. But the ''sanction tension'' will start decreasing by autumn, the seasonal pressure on the ruble will reduce and the rate will stabilise. If Brent Crude will remain at $50 and more, the euro will be at 70,15-73,60 at the end of August, by our estimates.

  • Aleksey Antonov

    Aleksey Antonov analyst at Alor Broker

    The ruble has very interesting dynamics now: Brent Crude's price per barrel grows and has already approached 3,200 rubles, while the ruble rate against the dollar is decreasing. I think it happens because, first of all, the new sanctions that presuppose restrictions on investments in Federal Loan Bonds. But 6 months left until these restrictions come into force. In general, the aggravation of the sanction fight between the USA and Russia does not favour the latter because it is clear the economy of the USA is bigger and more powerful. But Russia has had the support of the EU in recent time. The EU sees that the sanctions threaten its business and will lobby its interest, thus protecting Russia's interests as well.

    But, from my point of view, a corporate conflict between Sistema JFSC and Rosneft as well as possible actions of Rosneft in the currency market is the main factor of the weakening ruble. So the conflict in itself decreases the investment attractiveness of Russian financial tools because it raises a question on property protection in Russia. And the situation with Rosneft reminds the devaluation in 2014 when demand for the currency suddenly went up for some reasons. We can only guess about the causes. But I think it is possible that this year Rosneft will have to make big payments on its external debts like in 2014. And it will use the 170bn rubles that Sistema JFSC is trying to get through action. Then these rubles can easily get the currency market to purchase currency and pay the external debt out, and this sum can considerably change the rate.

    If it happens at the end of the summer, the rate of 65 or even 68 rubles per dollar will be considered normal in September. I think now the majority of currency market players include this scenario to their trade strategies and buy the dollar. There is a more dramatic scenario of the ruble's fall by New Year because it will suffer from a budget deficit during many pre-election promises of politicians.

  • Natalia Milchakova

    Natalia Milchakova deputy director of Analytic Department at Alparis

    In our opinion, the ruble is falling for following reasons. First of all, changes in the oil market. It could be caused by both negative news about the growth of commercial oil reserves in the USA and expectations of the OPEC Monitoring Committee's meeting that is expected information about those who breached the oil production cut agreement.

    Secondly, the anti-Russian sanctions ''from Trump''. However, the influence of this news on the currency market is weaker and weaker because, historically, sanctions of the USA have never considerably affected the economy of Russia because of small foreign trade turnover. And it seems that the situation with Nord Stream-2 will be solved in the EU, especially in Germany, not in the USA.

    Thirdly, the geopolitical tension including both the information in the American media that Trump is thinking about economic sanctions against China and aggravation of relations between China and India on the disputable territory on the Indo-Chinese border (Doklam plateau) where both countries send forces (though we think it is unlikely to turn into a military conflict).

    Fourthly, the holiday season has its own influence when demand on the dollar and euro in cash increases. And the beginning of dividend payouts by corporations to their foreign shareholders, what also increases the demand for the dollar and euro.

    The nearest goals on the dollar: 60,7-61 rubles per dollar if these levels are reached, the dollar will have an open road to 62 rubles per dollar. A further scenario will depend on, first of all, development of the situation in the oil market.

By Dmitry Semyagin, Artyom Malyutin