ruble prospects: analysts told what to expect from the Russian currency
Today, the Russian ruble depreciates, reacting to yesterday’s drop in oil prices. Demand for riskier assets also remained low due to the weak trend in Asian markets.
By 15.00 Moscow time the US dollar rose by 1% in relation to the national currency – to the level of 66.60 rubles. Meanwhile, the euro / ruble at this time was 75.73.
Strategists at Deutsche Bank, however, believe that the ruble is in a “better position”. This opinion is based on the assumption that oil, the main export product of Russia in the medium term will continue to grow in value, and penalties in connection with the conflict in Ukraine will be lifted “in a year or so.”
In addition to these factors, support the Russian currency has a cautious policy of the central bank, which is in no hurry to renew the cycle of interest rate cuts, bringing the key rate remains high – at 11%. The high rate helps to support the ruble, making it attractive for the players on the difference in interest rates within the carry trade operations. The ruble remains one of the most profitable currency in the world, if we take the difference in the rates of the central banks.
“In addition to oil prices, there are other reasons to be optimistic about the prospects for the ruble in the medium term, – Deutsche Bank analysts write Gautam Kalani and Christian Vietoska. – There is a chance that the sanctions will be lifted within the next year or so, that is a positive factor for capital inflows, so for market sentiment against the ruble. “
For the near future, most analysts agree that the ruble has already exhausted most of their potential.
“We believe that in the majority of developing and developed countries indicators of real economic activity continue to disappoint, as the potential for further stimulating monetary methods exhausted itself in many ways. For example, in the Russian market a large amount of accumulated long ruble positions precludes further rallies without any positive catalysts. Our forecast for this week? 68 rubles to the dollar “, – says the chief economist for Russia Credit Suisse (SIX: CSGN) Alexey Pogorelov.
Deputy director of analytical department of the IR “Okay Broker” Sergey Alin said that next week the average value of the ruble will be 67.40 per dollar. “Probably, the ruble next week will begin to suffer from speculative pressure, – he says. – Condition of the global market today is unstable, including a very volatile oil. In addition, investors’ appetite for risky asset classes may fall on talk of a possible increase in US interest rates. With regard to the internal state of the monetary market, the tax periods in the second half of the month generally support the ruble. But if the Bank of Russia will start to lower its key interest rate, it will put pressure on the national currency. “
During the beginning of the year (February-April) is generally favorable for the national currency, but here in May and June, it is often seasonally weaker.
Denis Asainov analyst UK “Alfa Capital”, also believes that the rally in the ruble comes to an end. It is likely that we will see a stabilization of the ruble at around current levels, he says. For short periods is likely a small correction in the oil, which then will have an impact on the ruble, however, has a smaller effect. In this case, the potential for further strengthening of the ruble is limited because of the likelihood output RF Central Bank in the currency market to replenish reserves, the economist said.
“Dependence on oil ruble continues to decline, and increased volatility in the oil hardly reflected in the ruble. The gradual weakening of the ruble attachment to the price of oil is due to several reasons. Firstly, the share of oil and gas revenues decreased to 30%, indicating that reducing dependence on oil prices. Secondly, the positive current account indicates the flow of dollars into the economy. Thirdly, the impact has no problems with dollar liquidity in the banking sector, which is reflected in current rates on deposits, “- says Denis Asainov.
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