The Russian currency, the ruble, braces for summer.
Rewritten Article:
May is shaping up to be a pivotal month for Russia's currency. Here's what the analysts have to say:
Alpha-Capital Investment Company
The exchange rate between the ruble and the dollar and yuan is predicted to return to the 85-90 and 12 range respectively, according to analysts at Alpha-Capital. The trade balance remains a significant factor influencing the ruble, and data from China's General Administration of Customs suggests a pickup in trade turnover with Russia in March. This, along with an increase in outbound tourist trips, will likely drive up demand for foreign currency, negatively impacting the ruble. On the export side, a correction in oil prices works against the ruble, as it reduces foreign currency inflows.
The geopolitical situation is unpredictable. A certain progress in the Russia-Ukraine negotiation process could reduce the need for risk-hedging in currency. In this scenario, importers might slow down their foreign currency purchases, expecting improvements in trade conditions, while exporters could factor in lower risks of currency getting stuck abroad.
Finam Investment Company
The ruble reached its strongest levels against the dollar and yuan in recent months in mid-April, despite Brent oil prices consistently falling below $70 from $80 at the beginning of the year. Apart from oil prices, there are other factors currently influencing the ruble. In March, foreign investors actively invested in Russian government bonds, selling currency for rubles. This influx of foreign funds has been attributed to the current ruble strengthening.
Russia's current account balance is holding up well. However, there is a time lag between changes in oil prices and their impact on the current account balance. As a result, the ruble may weaken in the summer, as the influx of currency from April's oil sales at low prices will be minimal at that time.
The forecast for currencies for the rest of the month: for the dollar, we expect trading in the range of 81-85 rubles, for the euro - 91-96 rubles, and for the yuan - 11.0-11.6 rubles. By the end of the year, the dollar rate may rise to the 98-100 range, the euro may recover to 110 rubles, and the yuan may be in the 13.7 range.
First Investment Company
The strong ruble in May is unlikely to be maintained due to high uncertainty surrounding geopolitics and external conditions. However, the trade balance may deteriorate in June, lagging behind the drop in oil prices. The Central Bank is expected to significantly increase foreign currency sales under the budget rule due to the decline in oil prices in April.
The shift in geopolitical circumstances has significantly tempered devaluation expectations. Therefore, selling foreign currency and attracting foreign currency loans at lower rates has become more appealing to some companies than expensive ruble loans. However, a dollar rate of 80 rubles or lower calls into question the feasibility of using the interest rate differential if companies' one-year currency expectations exceed 100 rubles per dollar.
Without significant positive developments in geopolitics, May may mark the peak of the national currency's strengthening. After this, the ruble's depreciation is expected to begin in the late spring or early summer. If the geopolitical agenda remains free of major negatives, the ruble will maintain strong positions until the start of summer, with the dollar trading in the 80-86 rubles range and the yuan in the 11-11.8 rubles range.
Sovcombank
In a baseline scenario without significant geopolitical changes, we expect the ruble to trade in the range of 10.7-11.7 against the yuan, 78-86 against the dollar, and 89-98 against the euro in May.
The main influence on the ruble's course continues to be exerted by the geopolitical agenda. The current strengthening of the ruble may persist as long as there is progress in Russia-US negotiations or until Russian authorities implement measures to curb the ruble's strengthening. Expectations of sanctions easing and foreign capital inflows to the Russian market will intensify. Domestic market participants will begin to close long positions in currency and open long positions in the ruble, while exporters may accelerate currency sales "today" on fears that "tomorrow" it will be cheaper. In this scenario, the ruble is likely to consistently move into the 70-80 range per dollar in the coming months. In case of significant foreign capital inflows to the Russian market, the dollar may drop to 60-70 rubles. In case of escalation in negotiations and deterioration of the geopolitical situation, the dollar-ruble pair may quickly return to the 90-100 range.
First Investment Company (Updated)
Given the persisting high uncertainty surrounding geopolitics and external conditions, it's unlikely that May imports will increase significantly. However, the trade balance may deteriorate later in June, lagging behind the drop in oil prices. The Central Bank is expected to significantly increase foreign currency sales under the budget rule due to the decline in oil prices in April.
A dollar rate of 80 rubles or lower raises questions about the feasibility of using the interest rate differential, i.e., the difference between central bank key rates, if companies' one-year currency expectations exceed 100 rubles per dollar. Therefore, without significant positive developments in geopolitics, the 80 rubles per dollar range may mark the peak of the national currency's strengthening, with the ruble's depreciation expected to begin in late spring to early summer. If the geopolitical agenda remains free of major negatives, the ruble will maintain strong positions until the start of summer, with the dollar trading in the 80-86 rubles range and the yuan in the 11-11.8 rubles range.
Keep up with the latest currency exchange rate news in our Telegram channel @expert_mag
- #CurrencyExchangeRate
- #Ruble
- #Geopolitics
- #Analysis
- #Forecasts
Insights:The ruble may experience fluctuations due to geopolitical and economic factors, but predictions indicate it could weaken against some major currencies later in the year. However, short-term trends can be volatile and influenced by numerous variables. The ruble's strength is influenced by speculative factors and geopolitical events. However, its rally may not be sustainable due to potential short-term budget challenges. Similar to the USD, the euro's value against the ruble is influenced by broader geopolitical conditions and economic policies. The ruble's value against the yuan can be affected by trade balances and geopolitical factors, particularly those influencing regional currencies. Oil prices and Central Bank policies also play a significant role in determining the ruble's exchange rate.
- The geopolitical situation, particularly the progress in Russia-Ukraine negotiations, could impact the ruble's exchange rate, as fewer risk-hedging activities may occur, potentially leading to a decrease in demand for foreign currency.
- Alpha-Capital analysts predict that the exchange rate between the ruble and the yuan will return to the 12 range, influenced by an increase in trade turnover with China, while the exchange rate between the ruble and the dollar is anticipated to be between 85-90, negatively impacted by the correction in oil prices reducing foreign currency inflows.
- Finance analysts suggest that the ruble may weaken in the summer due to a minimal influx of currency from April's oil sales at low prices, which may affect the current account balance and the ruble's exchange rate.
- Speculators may find the appeal of foreign currency loans more attractive than expensive ruble loans due to the shift in geopolitical circumstances, but a high dollar rate raises questions about the feasibility of using the interest rate differential if companies' one-year currency expectations exceed 100 rubles per dollar.
