Foreigners are buying up rubles

Foreigners are buying up rubles


The Russian currency over the January holidays rose to a two-year high

Photo: NEWS/Alexander Kazakov

The beginning of the year for the Russian currency develops suddenly successfully. Over the holidays, the dollar became cheaper 60 rubles by the return of foreign interest in the ruble and rising oil prices. It is a maximum of two years of the ruble. Experts believe that in the coming months, the Russian currency may strengthen to 57-55 rubles per dollar due to the stabilization in the economy and increased interest from investors.

Moscow exchange currency trading is traditionally held during the January holidays. On Friday, January 6, they closed at the level of 59.6 rubles per dollar, compared with 61,3 on December 30. As the Russian players these days are usually inactive, the demand is almost completely formed by foreigners. Often they sell rubles, but now buy. This is quite an unexpected trend: in the past in December–January, the ruble has traditionally been weak. The volume of transactions during the holidays was just one and a half times lower than on weekdays, which is somewhat atypical for the January lull.

Chief economist at Eurasian development Bank Yaroslav Lissovolik says “serious bets on the ruble from the biggest players in the financial markets.”

— From global investment banks is quite active positive orientation to the Russian assets and the ruble, he explained. So the ruble has potential for further growth. The strengthening of the ruble is justified, it has quite serious grounds. In the future, the dollar will fluctuate in the range of 55-60 rubles.

The strengthening of the Russian currency indicates the positive sentiment of traders about the attractiveness of the ruble, agrees chief economist at Alfa Bank Natalia Orlova. She supposes that could play the role of the prospects for the lifting of US sanctions against Russia after coming to power of Donald trump, is “quite a strong effect on the mood of the Russian traders.”

The interest of foreign investors to Russian assets has been increasing recently due to the General improvement in the economy, says Professor of the Russian Academy of national economy and public administration under the President (Ranepa) Alla Dvoretskaya. For example, the share of nonresidents in the Russian Federal loan bonds (OFZ) grew from 21% to 27%. The situation improved due to the slowing down of inflation, reduction of capital outflow and strengthening of the budget system, he said.

Such strengthening of the ruble puts questions to the Finance Ministry and Central Bank: the budget is too strong ruble is disadvantageous because of the risk of declining revenues from exporters. In General, the corridor of 55-60 rubles per dollar is acceptable for the economic authorities, experts estimate.

— The question arises — what will the Finance Ministry and the Central Bank on the dynamics of the ruble, whether verbal or other intervention? I think that in the interval the ruble can move without any action by the monetary authorities. But at current oil prices, the dollar’s fall below 55 rubles may entail measures on the part of the government or the Central Bank. The latter may at some point take advantage of the situation to build reserves, — says Yaroslav Lissovolik, Recalling the strategic plans of the Bank of Russia to increase reserves to $500 billion.

None of the interviewed by “Izvestia” of economists does not see the factor of privatization of “Rosneft” among the reasons for the strengthening of the national currency. In mid-December the Finance Ministry reported receiving the full amount of €10.2 billion — according to the results of the privatization of a 19.5 percent stake in oil company. Some experts feared that this deal due to the large inflow of foreign currency into the Russian market could destabilize the exchange rate. But this did not happen.

Rising in price since the beginning of December oil a decisive influence on the course had, but some support was given. Promsvyazbank senior analyst Michael Poddubsky noted that a positive for the commodity markets was ensured achievement of the long-awaited agreement of OPEC to reduce oil production. To January 8, reports of the decline in output came from Saudi Arabia, Iraq, Kuwait, Oman and other major suppliers. This is supporting prices and, accordingly, the currencies of oil producing countries.

On the horizon the first half of the Russian currency may continue to look very good, and the pair dollar/ruble has a good chance to move into the area 57-58 rubles per dollar, — says Mikhail Poddubsky.

However, the optimism of investors depends not only on the situation inside Russia, but also from world market. Therefore, in the case of correction on world platforms or new external challenges the ruble may return to the level 62-63 rubles per dollar.

See also:

The strong rouble and weak growth: economic results of 2016 years and forecast for 2017

Russia has achieved record low inflation

The ruble has entered a stage of resistance