Last week, the ruble achieved another victory over the world’s leading currencies. On Wednesday, the dollar exchange rate on the Moscow Exchange dropped below 90 rubles/$, reaching 88.78 rubles/$. It was not possible to maintain the achieved levels, and following the results of Friday trading it returned to the level of 90 rubles/$, which is almost 2.3 rubles. below the values at the end of the previous week. The strengthening of the position of the Russian currency is facilitated by the high supply of foreign currency by exporters while the demand for it from importers decreases, as well as the global weakening of the American currency.
|Banks||Dollar exchange rate forecast (RUB/$)|
|“BCS World of Investments”||88.50-91.50|
|Russian Standard Bank||88.00-90.00|
|Consensus forecast *||89.45|
* Consensus forecast was calculated as the arithmetic average of analysts’ forecasts
November tax season is ahead
The ruble continues to confidently regain its position. Support is provided by the global weakening of the dollar after the publication of US inflation data in October, which turned out to be below market expectations. Preliminary statistics on foreign trade of the Russian Federation indicate the beginning of a reduction in imports, which should also support the ruble. November tax season is coming up. We estimate the volume of basic payments at 2.75 trillion rubles, which is 15% less than October payments to the budget, which, however, is enough to allow the ruble to continue to strengthen its position.
Investors may partially reduce short positions
The ruble lost its momentum to strengthen amid falling oil prices. As a result of a rollback in exchange rates, investors may partially reduce short positions, which can locally neutralize the sales factor on the part of exporters. At the same time, we are waiting for the development of the movement of the dollar-ruble pair in the direction of 83–85 rubles. closer to tax payment period (November 28). A stable supply of currency from exporters is sufficient to strengthen the ruble in the face of declining demand from importers. We also count on the stabilization of the situation on the oil market.
markets will be awaiting the results of the upcoming OPEC+ meeting
The Russian ruble continued its strengthening trend, which has been observed for several weeks. Its exchange rate is still largely determined by the balance of payments and the increase in exports in terms of price indicators. Oil prices stabilized slightly by the end of the week after declining on the back of US industrial production data, showing a weakening American economy and, as a result, lower demand for oil in the future. So in the coming days, markets will be awaiting the results of the upcoming OPEC+ meeting, at which further measures will likely be taken to adjust oil production.
The decline in oil prices is a negative for the national currency
Our forecast for the ruble to dollar exchange rate for next week is 88.5–91.5. In the near future, the ruble may be supported by additional sales of foreign currency before the tax period. However, the volume of November payments is expected to be smaller than in October, and we are unlikely to see a pronounced effect. The balance in the balance of the ruble is still high rates and mandatory standards for foreign currency sales for exporters. The negative impact for the national currency is the decline in oil prices, which has been observed since the beginning of November and has intensified this week. Although in practice price declines in raw materials are translated into the position of the ruble with a time lag of several weeks, market participants can already factor in the current deterioration in oil prices by giving preference to foreign currencies.
The rate still has the potential to strengthen to 87 rubles/$
By the end of next week, we predict the rate in the range of 89.5–91.5 rubles/$. The strengthening of the ruble is facilitated by the decree on the mandatory return and sale of part of foreign currency earnings, a decrease in the population’s demand for foreign currency as the summer holiday period ends, as well as the gradual preparation of companies to pay taxes as part of the conversion of foreign currency earnings. Note that the rate reached 88.5 rubles/$., from where purchases were observed from market participants. In the short term, the rate still has the potential to strengthen to 87 rubles/$, where the 200-day moving average passes. On the other hand, in the medium term, we see a more market-oriented trading range in the range of 90–100 rubles/$. Of the important events until the end of the week, we highlight the OPEC meeting and the meeting of the OPEC and OPEC+ monitoring committee, which will take place on Sunday. Recently, we have observed a significant decrease in oil prices, which in the medium term will put pressure on the balance of payments of the Russian Federation and, as a result, will shift the exchange rate to the range of 90–100 rubles/$.