MOSCOW, September 13. /TASS/. The ruble has the potential to strengthen, according to analysts interviewed by TASS. They noted that the Russian currency may rise to 90 rubles per dollar, but it is too early to talk about further growth.
The steady strengthening of the ruble will be supported by the Bank of Russia's tightening of monetary policy (a key rate meeting is scheduled for September 15) and the rise in the price of Brent oil to $90 per barrel recorded since the end of June. This compensates for the decline in Russia's production, and also reduces the discount of Russian grades to Brent, according to Vasily Karpunin, Head of the Information and Analytical Content Department at BCS World of Investments. According to experts, positive oil dynamics will improve the situation with exports.
Raising the key rate reduces the demand for imports, which increases people's inclination to save. "A decline in aggregate demand will in turn reduce the demand for imported goods, which will contribute to a healthier current account balance and a favorable impact on the ruble exchange rate," senior analyst at Pervaya Management Company Vladislav Danilov said.
According to experts, the change in the key rate in the current environment has a limited impact on the currency. "Previously, the increase in the key rate helped to curb capital outflows and increased the attractiveness of ruble assets for Western investors. Now, in connection with restrictions on capital movements, the key rate has ceased to perform this function, so its increase will provide only limited support to the ruble," according to head of the Department of Analysis of Banks and Money Market at Veles Capital Yuri Kravchenko.
However, "the ruble exchange rate has already attracted the attention of both the Bank of Russia and the government," so its further weakening will provoke a harsh reaction, according to Vladimir Bragin, director of financial market and macroeconomic analysis at Alfa Capital. For example, restrictions on capital movements could be reinstated and control over exporters' financial flows could be tightened, he noted.
In addition, the ruble should be supported by an increase in the Bank of Russia's foreign currency sales starting on September 14. This volume is expected to grow about 10 times to 21.4 bln rubles ($222.62 mln) per day.
According to Finam Financial Group, the dollar-ruble pair will find support around the 92-ruble level in the coming week, while BCS World of Investments expects the dollar to return to the 90-ruble level in the near future. Finam also mentioned that the Russian presidential elections will be held in the spring of 2024, and that "prior to them, the ruble exchange rate generally remains stable or strengthens".
However, analysts agree that the potential of the Russian currency to strengthen against the dollar is limited at 90 rubles. This is due to ongoing balance of payments problems, such as challenges with the return of export revenues and the influx of "toxic" foreign currency, as well as structural deterioration of the financial account and capital outflow through imports. "All this will not allow the ruble to consolidate at the level of 85 rubles per dollar, although short-term market movements can be extremely volatile and wide," Veles Capital Investment Company noted.
According to Tsifra broker analyst Daniil Bolotskikh, Russia needs to restore export volumes to see the 85 ruble figure. "However, judging by the recent decision, Russia will cut oil exports by 300,000 barrels per day by the end of the year. Moreover, according to the Bank of Russia's July medium-term forecast, exports will fall by 30% year-on-year to $414 bln by the end of the year, so it is too early to talk about strengthening to 85 rubles," the analyst added.