The ruble falls for the second day. During morning trading on the Moscow Exchange, the dollar exceeded 67, the euro – 71. This turn of events was clearly provoked by the Central Bank, which unscheduled the day before lowered the key rate to 11% per annum.
Having risen in the second decade of May to a level threatening state treasury revenues, the Russian currency was doomed to this man-made weakening.
Since mid-March, the ruble has been steadily strengthening after the strict currency control introduced in the country by the Central Bank. On May 24, the market rate of the dollar reached its lowest value since 2018 – 56.8, and the euro fell to a minimum of 2017 – 60.1 rubles. After that, the situation turned sharply, and by the close of trading on May 25, the “American” immediately added 2.5 rubles, the “European” – 2.1. Well, then both Western currencies went only up.
In the opinion of Vladislav Antonov, a financial analyst at BitRiver, the process of strengthening the ruble at some point got out of control of the Central Bank, although, according to Elvira Nabiullina, it did not pose a threat to financial stability. The Ministry of Finance was seriously concerned that such an exchange rate of the domestic currency would reduce the treasury’s revenues from energy exports in ruble terms. The budget for 2022 includes a dollar exchange rate of 72.7 rubles. So, it is necessary to strive for it. Under any circumstances, one cannot do without foreign currency: as Nabiullina noted, the economy is entering a period of structural transformation and will be in dire need of financial resources.
“It is extremely unlikely that the ruble will reach 70 to the dollar – most likely, it will begin to stabilize around 65-67,” says Nikolai Pereslavsky, an employee of the Economic and Financial Research Department of the CMS Institute. – For the euro, the story is about the same, but with a plus of 3-4 rubles. This alignment will be maintained until the next meeting of the Central Bank, which will be held on June 10. On it, presumably, the key rate will be reduced again. Then it will already be possible to assume that the ruble will approach the values of 70 per dollar and 75 per euro.”
In the meantime, it is “cooling down” a little after falling on Thursday by almost 10% from Wednesday’s levels. Probably, the balance in this short-term volatility will be found in the region of 65-67 rubles per dollar and closer to 70 per euro. The ruble is still influenced mainly by the policy of the Central Bank: external levers of pressure on it do not work yet – there are no non-residents on the market. In particular, the regulator softened the requirement for the mandatory sale of foreign currency by exporters: now they must sell 50% of foreign exchange earnings within 120 (rather than 60) days from the date of receipt to a bank account. In addition, interest in the currency has increased on the part of domestic importers – due to the full launch of parallel imports.
“An economically justified exchange rate of the ruble is about 64-65 per dollar,” says another financial analyst, PhD in Economics Mikhail Belyaev. – The deviation from this equilibrium state turned out to be too large and sweeping for some period, and was due more to informational and psychological factors than to real economic ones. For example, one can note the obvious strengthening of the role of the ruble in the system of international payments, in particular, payments for Russian gas supplies. It was clear that a course correction could not be avoided.”
And the new Central Bank rate of 11% per annum definitely played its role, again, to a greater extent in terms of information. By itself, the value of the rate affects economic mechanisms not directly, but indirectly. According to Belyaev, the dollar is unlikely to climb too high, up to a maximum of 70 rubles. And then the “American” will gradually but inevitably return to the levels of 64-65. Since the general economic situation remains extremely unstable and contradictory, the significance of the information background, some accompanying events, has been strengthened many times over. When everything is calm and predictable, the impact of this “foam” is negligible.