MOSCOW, February 7. /TASS/. Experts interviewed by TASS expect the value of the ruble to weaken to 110 units per dollar by the end of the year.
In January, the Russian currency strengthened, and traditionally, the ruble is the strongest from February to April, the experts note.
At the end of January, exchange rates declined gradually from local highs reached earlier in the month. In particular, on January 31, the dollar fell to 98.58 rubles on the Forex market (ICE, a composite index of several forex brokers), having lost 13.3% in a month, the euro was down to 101.2 rubles, having decreased by 14.1% in the same period. The Chinese yuan was down by 5.7% - from 13.99 rubles to 13.2 rubles.
Why is the ruble strengthening?
The ruble's recent strengthening occurred primarily in the second half of January, as market participants prepared for tax payments at the end of the month, explains Yuri Kravchenko, head of the banking and monetary market analysis department at Veles Capital.
"In seasonal terms, February-April is the most favorable time for the ruble, meaning the ruble is usually the strongest in this period. This is related to strong indicators in the country’s payment balance," BCS Investment World’s Alexander Shepelev added.
Apart from the seasonal factor, the ruble is supported by tight monetary policy, sales of foreign currency as part of the fiscal rule, and currency control policies. Moreover, the Chinese market has been closed due to local New Year celebrations, which resulted in lower demand for the yuan among importers, Shepelev noted.
"We see a positive trade balance and a growing volume of payments in rubles for import. High interest rates are propping up investments in Russia, either in the form of deposits or investment in bonds, which somewhat mitigates the outflow of capital," Tsifra Broker analyst Ivan Yefanov said.
What’s next for the ruble?
The VTB My Investment broker believes that this year the ruble’s exchange rate will gradually weaken. "Pressure on the ruble will come from the likely peak in the key interest rate, as well as the recovery of imports," it said. The broker expects both the dollar and the euro to trade at 108 rubles. Moreover, it projects the yuan exchange rate to sit at 14.4 rubles by the yearend.
In turn, Renaissance Capital economist Andrey Melashchenko believes that the ruble may be substantially volatile due to non-market factors at some point, whereas in the long-term it is likely to reach its fundamental value, which will be under the pressure of a decrease in export revenues this year. Renaissance Capital forecasts that the ruble will weaken against the dollar to 110 rubles by the end of 2025.
The dollar was rather volatile in January, and if it starts weakening it will support the ruble, Tsifra Broker said, adding that it is quite possible that "a number of those factors coupled will continue supporting the ruble," though it does not expect as firm strengthening as in January. Tsifra Broker projects the ruble to strengthen against the dollar to 96.7 rubles in the short-term, and to remain at the 97-103.8 rubles per dollar range in the mid-term.
Veles Capital suggests that the CNY/RUB pair will continue moving in the 13-13.25 rubles range in the near future, though its attempts to set below 13 rubles by the end of the quarter are not ruled out. The dollar exchange rate may adjust to the 97-98 rubles range, while the euro may dive below 102 rubles.