Currency interventions against the unsinkable ruble: either it will help or not

Currency interventions against the unsinkable ruble: either it will help or not

Currency interventions against the unsinkable ruble: either it will help or not

21 July, 16:15
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The dollar exchange rate, which continues to decline to the psychological mark of 54 rubles, is unlikely to be significantly corrected in the near future.

Financial analysts do not give up their forecasts that by the end of the year the national currency will lose its positions to 70-75 rubles per dollar, but so far all attempts to weaken the ruble have not been effective.

Yekaterina Maksimova

Now experts are betting on new budget rules: part of the country's oil and gas revenues can be directed to to intervene in the foreign exchange market in order to weaken the ruble. But this scheme also has detractors.

Oleg Syrovatkin, Leading Analyst of the Global Research Department at Otkritie Investments, believes that these days the Russian currency is in demand due to a local factor: exporters are approaching another tax period, the peak of which will be next week.

“In addition, the same usual factors continue to affect the market: the demand for foreign currency, even after the legalization of parallel imports, cannot yet balance its inflow to the Moscow Exchange coming from Russian exporters”, - Oleg Syrovatkin clarifies.

The author of the telegram channel “Kubyshka. Finance” Yevgeny Marchenko adds: “There are only a few banks left that make it possible to buy a dollar on the stock exchange without horse commissions. {…}. So these same restrictions and the almost complete absence of imports nullify all attempts by the Central Bank to keep the ruble from its rapid strengthening. And here it’s not even about the strengthening of the ruble, but simply about the lack of demand for dollars.”

In his opinion, next week, when the tax period for exporters ends and the dividend payment season ends, the dollar will strengthen slightly, but not significantly. “So far, I see a more likely scenario for a hike to the level of 50 rubles per dollar. Speculators are aimed precisely there,” Yevgeny Marchenko believes.

Oleg Syrovatkin also does not rule out the return of the dollar to the ruble in the range of 50-55 during the July tax period. “At the same time, such a development of events does not interfere with the implementation of our baseline scenario, which assumes the growth of the dollar and euro against the ruble to 70–75 by the end of the year,” he said.

Oleg Syrovatkin, a leading analyst at the Otkrytie Investments global research department, believes that the new budget rule, which the Ministry of Finance hopes for, will come into effect no earlier than the fourth quarter of this year. And until that moment, the Russian currency will have every chance for further strengthening.

Recall that the Minister of Finance Anton Siluanov earlier proposed to direct part of oil and gas revenues for interventions in the foreign exchange market in order to weaken the ruble. Including part of the budget expenditures can be “donated” for foreign exchange interventions through the purchase of currencies of friendly countries. It is assumed that the intervention will weaken the ruble by 10-20 rubles.

The authors of the Spydell_Finance telegram channel call the new budget rule a “return to the past” and believe that it does not fit into the current “configuration of financial and geopolitical reality.”

“The opportunities to use foreign exchange earnings are endless. But for now, exporters and the government are doing it according to the most idiotic scenario possible - leaving assets in toxic currencies in correspondent accounts in foreign banks in unfriendly countries, or zeroing out revenue through an inadequate ruble exchange rate. This is an erroneous strategy”, - Spydell_Finance believes and clarifies that it is better to direct foreign currency budget revenues to development.

Thus, Russia could lend to countries that are most loyal to Russia (Africa, Latin America). This would help to strengthen the financial connectivity of Russia and the outside world and, as it were, “hook” on the conditional dependence of these countries on Russia.

“The “Russian footprint” would make it difficult for Russia to invest in direct investments in strategic ready-made projects of geopolitically significant players (China, India, Brazil, Turkey, South Africa), but it would be more correct to deploy independent or partner projects in the field of energy, atom, space and agriculture in neutral countries. It could also strengthen Russia's economic connectivity with the outside world,” continues Spydell_Finance.

Russia could also send foreign currency for lending to importers. Another option is to invest in gold, rare earth metals, undermining the stability of the global financial system.

Novye Izvestia reported that in the event of foreign exchange intervention, the yuan looks like the most promising currency, which, in addition to the dollar and the euro, is now one of the three liquid currencies. And the share of trading in Chinese money is growing rapidly on the Russian currency market.

Prior to the beginning of the NWO, the trading turnover was about 1.33 billion rubles, now it is up to 40 billion a day. BCS Express experts already call the yuan a "rising star" of the foreign exchange market and note that the Chinese currency has become a de-dollarization tool and provides an opportunity to enter the foreign market.

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