A dollar for 200 rubles: a horror story or reality?

Yekaterina Maximova

The other day, Anton Prokudin, chief macroeconomist of Ingosstrakh–Investments, suggested that the dollar exchange rate, gradually strengthening, could reach 200 rubles in a few years. 

Prokudin, speaking at the forum "Strategic session of the Russian debt market", explained this by saying that there is no way to avoid the devaluation of the ruble if Brent oil prices are about $ 100 per barrel. "The dollar-ruble exchange rate may exceed 100 rubles by 2024, but it will not stop there and in 2025 it may exceed 200 rubles", - Prokudin noted.

However, analysts at SberCIB Investment Research disagreed with this forecast. And the depreciation of the ruble was explained by a temporary increase in geopolitical risks, not fundamental risks. According to their forecast, by the end of the first quarter of 2023, the ruble will return to 72 per dollar and will stay near 70 until the end of the year. 

And in the long term, the ruble will be supported and its volatility will be limited by the increase in global oil prices (by the end of the year Brent may rise to $ 91 / bbl.); reduction of discounts on Russian oil against the background of restructuring of logistics chains; budget rule (if the volume of oil and gas exports of Russia will decrease, the Ministry of Finance will increase sales of currency). Analysts of SberCIB Investment Research also remind that the Ministry of Finance estimates the equilibrium exchange rate of the dollar / ruble pair at no higher than 85 rubles (even in the scenario of a decrease in Urals quotations to $ 30 / bbl).

Professor, Doctor of Economics Igor Lipsits, at the request of Novye Izvestia, expressed his point of view about what will happen to the US currency in the short and long term. And the economist did not rule out the scenario of a significant weakening of the ruble. Here is his opinion: 

- The situation with exchange rates, of course, is very piquant, I would say. Recently, everyone in the government was very happy: foreign statistics came, indicating that Russia has practically restored import volumes to the level of 2021. Well, the joy is the same: the country was able to circumvent the sanctions and restored the volume of imports! We will not retell the old anecdote of the Armenian radio that they restored the wrong thing, not in the same volume and not at the same prices as before. Let's leave this question out of the brackets.

Something else is more interesting. If Russia has returned to the previous monetary volumes of imports, then it needs the same amount of convertible currency (that is, not rupees or yuan!) to buy such a mass of goods as in previous years. But since the main source of this currency – oil and gas revenues – is drying up a lot and instead of dollars and euros, Russia is now being paid in yuan, rupees and dirhams, then according to the laws of the market, increasingly scarce goods will grow in price, that is, the dollar and euro will be more expensive in rubles, and the ruble, respectively, will devalue in relation to them.

And here the following curious collision arises.

From the point of view of the Ministry of Finance, the devaluation of the ruble is a huge boon. To prove this, I will allow myself to quote the Minister of Finance of Russia, Mr. Siluanov, who, speaking at the congress of the Russian Union of Industrialists and Entrepreneurs in June last year, he said so bluntly: "We are even making an estimate now: one ruble of the exchange rate for the budget, according to our estimates, somewhere 130-150 billion rubles, we estimate that somewhere even 200 billion rubles (that is, the weakening of the ruble against the dollar by 1 ruble per year increases budget revenues for such an amount, and strengthening - reduces). Can you imagine, for a budget of 10 rubles of the course - a trillion rubles plus, that is, it is a good amount. And for you too", - Siluanov said, addressing the entrepreneurs sitting in the hall.

And if it were the will of the Ministry of Finance, it would in every way help the fastest devaluation of the ruble.

But for the president of Russia and most Russians, a "strong ruble" is a sacred cow, a classic symptom that things are in order in the country. And the Ministry of Finance, reluctantly, has to reckon with this and sells yuan for rubles, reducing the ruble mass, which otherwise would "hunt" for convertible currencies, generating a rapid devaluation of the ruble. However, the defense lines of the Ministry of Finance are not particularly powerful.

And the dollar is already growing faster than many Russian economists predicted. We expected that the rate would reach 75 rubles/USD by the summer, and by the end of the year it would approach 80. But the continuation of the active phase of its worsens the situation faster than expected. And forecasts of the exchange rate of 100 rubles / USD by the end of the year have already appeared, and next year all 200-and.

These are still, rather, the most alarming scenarios and there are still chances that they will not come true. But the longer and further Russia goes "on the road of its own", the faster the chances of preventing a strong devaluation of the ruble as the last lifeline for the Russian budget fade.Candidate of Economic Sciences, financial analyst Mikhail Belyaev emphasizes that the exchange rate of any national currency is a derivative of the general state of the economy. 

"The fact that since the end of last year, the ruble has been declining (against the dollar, against the euro, and even against the yuan) indicates that there has been a crisis in our economy… We will not call it a failure, but in any case - a pause in the adaptation and recovery period. The economy has stalled in the progressive movement forward and this was reflected in the fact that the ruble began to gradually decline. Not disastrously, but it began to slide. And in the creeping variant, the ruble loses its position against the dollar. There are jumps up and down, but the ruble is losing its position", - says Belyaev. 

Currency rates will definitely "jump" in the short term, financial analysts agree. So, last Monday, March 13, the dollar immediately fell by 110 kopecks (up to 75 rubles). But, as Mikhail Shulgin, head of Global Research at Otkritie Investments, notes, cheaper oil (Brent prices fell to $79.3/bbl.) prevents the ruble from strengthening (leaving confidently below 75 rubles per dollar).

According to him, the range in the near future is 74-76 rubles per dollar. Mikhail Belyaev believes that in March "we will lose the ruble" and the dollar will rise to 76 rubles. "And in April we will definitely lose another ruble and the dollar will rise in price to 77-78 rubles. But making forecasts for a longer term is a completely thankless task in the current economic conditions," Belyaev summed up. 

It's worth reminding that exports from the Russian Federation by the end of 2022, according to the Federal Customs Service, increased by 19.9% and amounted to 591.5 billion dollars. Imports to Russia decreased by 11.7% to $259.1 billion. Russia's foreign trade turnover increased by 8.1% in 2022 to $850.5 billion. At the same time, according to the Federal Customs Service, last year exports of mineral fuels, oil and products of their distillation, bituminous substances increased by 43% compared to 2021 to $ 384 billion. This is about 65% of all Russian exports, that is, the dependence of Russian budget revenues on the sale of energy resources remains extremely high.