Silence is golden. Ruble braces for news from USA

The Russian currency is recovering after a lasting fall. But don’t hold your breath: its situation remains shaky

Actions of the Central Bank and temporary silence due to sanctions have benefited the ruble. The Russian currency have begun recovering after 1,5 months of falling. The stock market has grown, while the increased profitability of federal loan bond has reduced. However, experts say don't hold your breath: the ruble's situation remains shaky, and the news about sanctions can worsen it. Realnoe Vremya tells the details.

Time for positivity

The ruble, which was falling in August and early in September, has entered the phase of correction since last week. The recovery began five days beforehand the Friday meeting of the Central Bank and continued after it. The rise in the key rate by 0,25 basis points and the regulator's claim about the interruption of purchases of the currency for the Finance Ministry till the end of the year have benefited the ruble. In addition, the news background linked with sanctions has calmed down a bit.

As a result, the Russian currency, which reached the bar of 70 rubles against the dollar 1,5 weeks ago, is back to the border of this psychological result. A weighted spot exchange rate of dollar was 67,7 rubles per $. The euro rate also fell lower than 80 rubles last week – to 79,15 rubles per € as from 18 September.

Positivity has established in the stock market. Moscow Exchange's index, which sank in July-August, have begun to grow in September: it renewed the record low on Tuesday and crossed the bar of 2,400 points for the first time (it was equal to 2 402,58 points by the end of the day). Sberbank's common shares, which lost 14% because of the news about possible sanctions against seven Russian state banks, started to recover. Sberbank's shares grew in price from 182 rubles on 31 August to 191,7 rubles on 18 September. However, they haven't bounced back yet.

The market of state bonds whose sales by foreign investors were one of the key factors of the pressure on the ruble has also stabilised a bit. The Finance Ministry has found it more complicated to issue federal loan bonds on previous conditions amid tightening sanction-related rhetoric: the profitability of ten-year shares exceeded 9%, though it didn't reach 8% in early August. In August-September, the Ministry of Finance refused to hold one of the auctions to issue federal loan bonds, another one was declared void. The profitability has lowered than 9% again on the recent days, however, the Ministry of Finance anyway decided not to hold the auction scheduled for 19 September.

''We shouldn't pay attention to the current recovery''

However, experts think it's early to be glad – the ruble's situation remains shaky, and the recovery can easily turn into a new period of fall. ''Unfortunately, if a new wave of sanctions is affecting the purchase of federal loan bonds by foreign investors, it will be quite complicated to restrain the ruble from collapsing. In addition, negativity can come from developing markets, in general – their currencies have recently been under pressure. With such tendency, another factor will weaken the ruble,'' says Assets Manager from General Invest Denis Gorev.

''Some 5-10% is standard volatility for the ruble. It's not a movement to talk about a change of the trend. This is why we shouldn't pay attention to the current recovery,'' thinks director of the analytic service of Dokhod MC Vladimir Kiselyov.

According to him, now the ruble is taking its lead from the positive news about the interruption in currency interventions by the Central Bank. In addition, oil prices remain at the top of its diapason. They can start correcting during the year. The cancellation of the OPEC+ deal or softer conditions on production cut can bring to it. Shale oil production in the USA, which continues growing, is also against high prices.

The ruble has partly lost its dependence on oil price in the last 6 months. This happened after imposing sanctions against Rusal and talks about measures against the Russian public debt. Now sanctions remain the key factor influencing the ruble – everything depends on how they will look and if they will affect the debt market. Kiselyov thinks they will affect anyway. If this happens, there will be a correlation between the ruble and oil again with no interventions.

The ruble has partly lost its dependence on oil price in the last 6 months. Photo:

''We see a global tendency for strengthening the dollar this year linked with raising rates in the USA. This trend will certainly go on. In addition, anxiety in developing countries' markets will come back,'' says Kiselyov.

By Artyom Malyutin