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What will happen to the ruble?
Material posted: Publication date: 05-12-2013

The ruble is at the crisis levels of 2009. Even expensive oil (more than 112 million. per barrel Brent) and high demand for ruble liquidity (in the tax period) do not contribute to the strengthening of the Russian currency.

The ruble has become significantly cheaper since the last decade of September. The value of the currency basket (consists from 0,55 dollars. and 0.45 Euro) has grown since then by more than 5%, with 36,66 RUB September 19 to 38.5 roubles yesterday.

On Tuesday the economic development Ministry has worsened its forecast for 2014-2016 on the current account and, as a consequence, the exchange rate of the ruble to the dollar. According to the Minister Alexei speaker, in 2014 the dollar will be worth 33,9 roubles (instead 33,4 rubles in the previous forecast), in 2015‑m — 34,8 rbl. (instead of 34,3 rubles), in 2016-m — 35,4 rubles (instead of 34,9 rbl.).

RBC daily asked several economists to comment on the reasons for the current weakening of the Russian currency and share opinions about its prospects for the near future.

Clemens Column,
Goldman Sachs, chief economist for Russia and CIS
The currencies of developing countries are generally under pressure, as the forecasts for growth in developed markets increased relative to similar projections for developing countries. However, such pressure in Russia should be felt weaker than in countries with a current account deficit, but in Russia there are specific pressures.

The Central Bank correctly wants to make the ruble fully flexible in the next year and has taken several steps in this direction, because of what the ruble is temporarily negative impact. In addition, because of rising prices for some products, such as eggs, accelerated inflation, and this means that the market ruled out the possibility of reducing rates. As a result, we saw sales from foreigners on the OFZ market. In addition, some uncertainty has created a situation with Master Bank.

But in the first quarter of 2014 Russia will again have a significant current account surplus in the amount of 20 billion dollars, what, in our opinion, outweigh the negative aspects and positive impact on the ruble exchange rate.

Vladimir Kolychev,
"VTB Capital", chief economist
The sharp drop in oil prices and the withdrawal of licenses from several major banks can seriously increase the pressure on the ruble, although I don't think that risks are high.

The price of Brent crude has remained relatively stable, despite some success in negotiations with Iran, which may indicate a confidence of market participants in the ability of OPEC to keep prices within the range, reducing the need own supplies.

As for the possible growth of demand for currency from the population, following the withdrawal of licenses from banks, I believe, the Bank of Russia understands the risks involved and will try to better control the background information that accompanies such "cleansing".

In any case, CB has no reason to abandon the current mechanism of interventions, which is mainly aimed at smoothing short-term fluctuations in the exchange rate and not targeting any particular level. If the pressure will grow substantially and will be of short duration, the controller will not interfere with the adjustment to a new equilibrium level. If it will be short, akin to a speculative attack, the current mechanism of interventions will smooth out these fluctuations.

Alexander Morozov,
HSBC chief economist for Russia and CIS
Scenarios in which oil prices will fall sharply, leading to a significant weakening of the ruble, there are, but in the near future are not visible. Moreover, in the first quarter of 2014 we expect a seasonal improvement in the balance of payments, which will lead to the strengthening of the Russian currency.

But in the future one or two years the ruble will weaken. Therefore, from the point of view of the holders, cash better to invest in the currency. If we consider Bank deposits, it is not so clear. Interest on rouble deposits is significantly higher than on currency, so even with the weakening of the ruble, they will likely be more profitable. And certainly it is unwise now to terminate ruble deposits, if they are already open.

Dmitry Harlampiev,
Bank Petrocommerce, head of macroeconomics
While tangible panic among the population is not felt. The share of deposits in foreign currency remained almost unchanged at around 18.5%, while in the crisis period of late 2008 — early 2009 this figure was closer to 34%.

Now the ruble is under pressure, with the exchange rate of the national currency demonstrates perhaps the worst dynamics among the currencies of developing countries (periodically looks worse only Brazilian real). In the basis of lower demand for relatively higher-yielding currencies is limited to interest risk associated with the uncertainty of the future of the fed's decisions in the field of quantitative easing, as well as the risks of a "false" output of the European economy from recession. However ahead of the negative dynamics of the ruble reflects the importance of internal factors.

Locally we can point to the tensions associated with revocation of license of Master Bank, which attracted deposits of natural persons in the amount of 47 billion rubles and was quite a major player in the market acquiring. More fundamentally affect the risks of long-term economic development associated with the need to optimize the structure of growth and the inability to overcome stagnation.

In the short term can not be excluded additional growth volatility. After the break basket level of 38.5 new goal may become the levels of the third quarter of 2009 — the region 39 rubles to the exchange rate, that would mean some 33,4 rubles per dollar. But in the first quarter of 2014 by the basket seems justified the level of 37.5, the ruble/dollar is 32.8".



Tags: Russia , crisis , finances

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