At the end of last week, the dollar against the ruble rose during exchange trading above 67.6 rubles, updating two-year highs. The new week began with a new fall in the Russian currency - on August 13, the dollar broke through the mark of 68 rubles. Since the beginning of August, the ruble has lost more than 8% against the dollar at a maximum, and in general, in terms of dynamics for last month among emerging market currencies, it was second only to the double-digit loss of the Turkish lira, which came under heavy pressure from the diplomatic conflict between the US and Turkey.

Another "black" August for the Russian market quickly refreshed the memory of the collapses of the ruble in December 2014 and January-February 2016, when the exchange rate US dollar rose above 80 and 85 rubles, respectively. Is it possible to repeat such dynamics in the current situation and how have the key factors affecting the ruble changed since those periods?

Oil and external debt

The sharp fall of the ruble in December 2014 was caused by large repayments of Russian companies on foreign debts as a result of the inability to refinance these obligations due to sanctions. After the first large repayments, which were extremely painful for the domestic currency, the situation with external debts later stabilized, and at present, if it bothers the Russian market, then infrequently. By the middle of 2014, the total external debt of the Russian Federation (the state, companies and banks) amounted to 732.8 billion dollars, by the beginning of 2016 the figure had decreased by almost 30% - to 518.5 billion. At this level, on average, it has been maintained up to the present time . The dynamics of the reduction of external debt is also reflected by the decline in dollar liabilities of the banking sector due to a decrease in the external debt burden of Russian business. Back in mid-2014, the volume of foreign exchange liabilities of the banking sector exceeded $400 billion, and by the middle of this year, it gradually decreased to just over $300 billion.

Also, do not forget that large payments at the end of 2014 occurred against the backdrop of a months-long drop in oil prices. If in June 2014 Brent quotes traded near $110 per barrel, then by the end of that year they dropped below $60. .

Today the situation on the oil market is very comfortable for the ruble. In May of this year, Brent quotes for the first time since November 2014 rose above $80 per barrel and, although they later corrected closer to $70, in general, over the past year they have grown by almost 40%. As a result, the positive balance of the current account of the balance of payments of the Russian Federation in the first half of 2018 amounted to $60.7 billion, which is three times higher than in the same period in 2017. For comparison: in the first three quarters of 2016, after a sharp decline in energy prices, the current account amounted to $14.5 billion, while in the II and III quarters it shrank to $1.8 billion and $0.1 billion, respectively.

Despite the growth in oil prices over the past year, the ruble lost about 10% against the dollar over the same period. Geopolitical risks remain a headache for the Russian currency. In addition, a new budget rule has also contributed, due to which, along with the growth of oil and gas revenues, the volume of foreign currency purchases for the Ministry of Finance also increases. However, in general, oil prices support the ruble rather than play against it.

OFZ, interest rates and liquidity

Today's flight of foreign investors from the ruble is largely due to fears of a possible ban on the purchase of Russian government bonds (OFZ). Such a risk, if realized, can indeed have quite serious consequences. According to the Central Bank at the beginning of July 2018, the share of non-residents in the government bond market was 28.2%. Back in early March 2015, this figure was only 17.9%. Since then, to date, the nominal volume of non-residents' investments in OFZs has increased 2.3 times, or by 1.1 trillion rubles, to 2 trillion rubles at the beginning of July 2018. At the same time, the entire OFZ market over this period grew by 2.3 trillion rubles, that is, foreign investors, in fact, provided half of the growth in the market for domestic public debt of the Russian Federation.

Investors are not particularly frightened by the cycle of reducing the difference in rates between domestic and foreign markets. Thus, since the beginning of 2015, the Bank of Russia has reduced the key rate from 17% to 7.25% per annum, and the US Central Bank (Fed) raised the rate on federal funds from 0-0.25% to 1.75-2% per annum.

However, even if events develop according to the negative scenario, the loss of the Russian market of domestic public debt from a large-scale exodus of non-residents (which in fact is already taking place) could be compensated by domestic banks, which have generated an impressive excess of ruble liquidity in recent years, mainly due to receipts through the budget channel. Back in early 2015-2016, the total free balances of banks on correspondent accounts and deposits with the Central Bank amounted to about 2.2-2.3 trillion rubles. To date, the corresponding figure is 4.8 trillion rubles (as of August 10). The surplus indicator of the banking sector is currently almost 4 trillion rubles, while at the time of its calculation by the Bank of Russia in early 2017, there was a liquidity deficit in the system (-0.7 trillion rubles). Thus, the current liquidity surplus of Russian banks covers the nominal volume of foreign investors' investments in OFZs by almost 2.5 times.

Sanctions and geopolitics

It can be summarized that today, in contrast to the periods of December 2014 and January-February 2016, the ruble is fundamentally played primarily by comfortable oil prices and a positive balance of payments; a markedly reduced volume of external debt; economic interest of foreign investors in interest rates in the domestic market. Besides, in banking system an impressive surplus of ruble liquidity has been formed, which would make it possible to “pick up” depreciated government securities in the event that non-residents withdraw from them.

However, if until recently, investors' fears were mainly related to a possible ban on the purchase of Russian government bonds by American investors, now market participants have succumbed to panic due to information about the upcoming freeze of all dollar assets and settlements of Russian state banks. At the moment investors receive such information, threatening the apocalypse of Russian financial system and the economy, all fundamental support factors for Russian market stop working. And the only reasonable investment is the purchase of currency.

At the same time, for the next collapse, it is not necessary to wait for the details of the upcoming sanctions, and even more so the moment of their actual introduction. For panic sales of the ruble and assets denominated in it, investors have recently only had to hear rumors. In such conditions, the devaluation peaks of past periods may become a new reality for the domestic financial market. The ruble, unfortunately, can only hope for the economic pragmatism and common sense of Western "partners".

The ruble has noticeably weakened over the past day, at the opening of trading on the Moscow Exchange, the euro exchange rate approached the mark of 77 rubles. The last time the euro was traded at this level was on April 16. For the first time since November 2016, the US dollar rose to 66 rubles. On August 10, the Central Bank set the official exchange rate for the US dollar at 66.28 rubles, and for the euro at 76.82 rubles.

The fall of the ruble is associated with reports of the preparation of new US sanctions against Russia. The US State Department said that the second package of anti-Russian sanctions in connection with the incident in Salisbury could be introduced in three months. US senators have submitted to the upper house of Congress a bill with a whole range of anti-Russian measures, including sanctions against Russia's public debt and Russian state-owned banks. The American bill on new anti-Russian sanctions proposes not only to limit transactions with Russia's public debt, but also to freeze assets in the States of VEB, Sberbank and VTB.

Analyst of the market analysis department of the investment consulting department of Otkritie Broker JSC Timur Nigmatullin told what the current dollar exchange rate is based on.

"Since the beginning of 2018, the ruble has not been a floating currency due to the fact that the Ministry of Finance regularly makes foreign exchange interventions - it buys all the currency from the market, which enters at oil prices above $40 per barrel. We now live at a rate corresponding to $40 per barrel ", - said the expert.
He added that this rate, without taking into account all geopolitical aspects, corresponds to the range of 55.5-61 for the dollar-ruble pair.

Photo: portal Moscow 24 (picture is clickable)

“Negative factors are additionally superimposed on this range. After the April sanctions, the dollar fell from the range of 55.5-61 to the range of 60-65. Due to the fact that non-residents sold bonds federal loan, exited ruble assets, the ruble steadily weakened, the US dollar rose steadily by 5 rubles in relation to the fundamentally justified range formed due to the interventions of the Ministry of Finance," Nigmatullin said.

According to the expert, the new sanctions will lead to another increase in the range. At the same time, the interlocutor of the Moscow 24 portal emphasized that at the moment it is difficult to predict anything, since there is a wide list of potential tightening.

Growth will continue

"The new round of sanctions will add about the same 5 rubles to the fluctuation range. If the US dollar moved into the 60-65 range after the April US sanctions against Russia, I think we may well see a stable range of 65-70 after the introduction of new sanctions," he said. Nigmatullin. In the case of the US senators' bill, according to the expert, they are proposing a bill "for congressional elections", which will be held in early November, and the initiative of the administration of US President Donald Trump can be implemented as early as August 22.

"Somewhere between these dates, the dollar-ruble pair may move into this range," the expert believes. He noted that it is necessary to monitor the fluctuations of the dollar, since it is the most liquid currency on the Moscow Exchange market.

As for future forecasts, the expert noted that the outflow of non-residents from ruble assets will increase. “Apparently, they will reduce their portfolios in federal loan bonds. In April, 400 billion rubles came out, I think the same amount will come out again. Plus, they will come out of the state debt, Sberbank has a lot of non-residents, I think they can also sell several hundred billion rubles ", - added the interlocutor of the portal Moscow 24.

"As a result, the dollar-ruble pair against the backdrop of all these sanctions, if they are introduced, may rise to the range of 65-70. If they are not introduced, we will return to the range of 60-65," the analyst summed up.

The issue of sanctions is open

Senior Strategist, Fixed Income Research, Sberbank Investment Research Vladimir Pantyushin believes that the issue of imposing new sanctions remains open, since at the beginning of the year "the US Treasury expressed its position quite clearly that it is wrong to impose sanctions on Russian public debt."

"The fact that the market reacts to this is unequivocal. However, sanctions are not the only factor, August is not very seasonally good month, international trade imbalanced towards imports. Against such a background, pushing the ruble to weaken, sanctions were imposed, a slight panic began in the markets. But the markets have already been turned, rather, back to the ruble. In my opinion, the panic part should end in a few days," the expert believes.

At the same time, he does not believe that a decision will be made regarding the Russian public debt. "But the risk remains, for the next few weeks, against the backdrop of seasonal foreign trade flows for the ruble, the prospects will, of course, continue to weaken, but not at such a pace. I expect that when the seasonality unfolds, in the second half of September - in October, the weakening will partially bounce back," - said Pantyushin.

Evgenia Markova

In 2016, experts' forecasts allow another collapse of the ruble, which will be the result of a decline in oil prices.

At the same time, optimists are counting on the stabilization of the domestic currency before the end of the year. In addition to oil market trends, the value of the ruble depends on the pace of economic recovery and the policy of the Central Bank.

Oil Rally

The collapse of the ruble at the beginning of the year is associated with a fall in oil prices. "Black Gold" updates the next anti-records, reacting to the overstocking of the market. In the near future, oil will continue to fall in price, experts say, which will affect the weakening of the Russian currency. The decline in oil production may change the dynamics of the market. Already in February, the main exporters can discuss an action plan aimed at stabilizing prices for "black gold".

In the second half of the year, oil prices will resume growth, which will allow the ruble to regain its lost ground. At the end of the year, the Russian currency will return to the range of 60-70 rubles / dollar, experts admit. However, some analysts, including representatives Morgan Stanley, do not predict an increase in quotations above 30 dollars per barrel. until 2017.

Another factor affecting the position of the ruble is the dynamics Russian economy. The Ministry of Economic Development believes that the peak of the crisis is behind us, and the economy has managed to overcome the negative trend. According to the results of the current year, a slight decline in GDP (within 0.8%) will be recorded, which will be a signal for the restoration of economic development.

The assessments of international experts practically coincide with the government's forecast. Analysts Fitch expect a fall in GDP in 2016 by 1%, which is in line with the forecasts of experts from the European Commission. Growth is possible not earlier than next year, which will negatively affect the value of the ruble.

The dynamics of the dollar will depend on the policy of the Central Bank. In January, the regulator did not dare to change the key rate, fearing instability on foreign exchange market. Alfa Bank representative Natalia Orlova is sure that the regulator will resume interventions if the exchange rate approaches the 80-90 rub./dollar line.

Economists' forecasts allow for two main scenarios: stabilization of the exchange rate or a new collapse.

Waiting for the collapse

Analyst Alexander Kuptsikevich does not rule out an increase in the dollar exchange rate above 100 rubles / dollar. This option development of events is possible in the first half of the year, when oil prices may fall to 25 dollars per barrel.

Expert Stepan Demura believes that the dynamics of the ruble will be much worse. The Russian currency will collapse to 125 rubles / dollar, while the situation will worsen in the second half of the year, when the government exhausts existing reserves.

If oil prices remain in the range of 30-40 dollars per barrel. within a year, the dollar exchange rate will exceed the bar of 100 rubles / dollar, Bank of America experts predict. In some periods, the cost of the American currency will reach 140 rubles. Otherwise, the government will not be able to maintain a three percent budget deficit.

In its turn Gazprombank analysts believe that the Russian currency has every chance to stabilize by the end of the year. According to their forecast, the value of the dollar in December will be in the range of 70-75 rubles / dollar.

The Ministry of Economic Development predicts an average exchange rate of 68.2 rubles per dollar. The average cost of a barrel of oil will be $40.

budget question

Under the current conditions, the main problem of officials is the reduction budget deficit. The Ministry of Finance has already launched the process of attracting external borrowings, which will be quite difficult to implement under the current sanctions. In addition, the ministry has developed a number of measures to reduce budget spending. The possibility of selling state-owned stakes in large companies is also being discussed.

If all these instruments do not bring the desired result, the authorities may go for a further devaluation of the ruble. This will help protect budget revenues from negative influence low prices for oil.

The position of the ruble will be determined three key factors:

• oil market dynamics;
• economic recovery;
• central bank policy.

In 2016, experts predict two main scenarios for the Russian currency: stabilization or another collapse.

Under the most favorable scenario, the value of the dollar will stabilize within the range of 60-70 rubles/dollar. The pessimistic scenario assumes a collapse to new anti-records. In the short term, the dollar exchange rate can reach 140 rubles / dollar.

MOSCOW, August 9 - RIA Novosti. The dollar and the euro increased growth on Wednesday evening, the US currency renewed its maximum against the ruble since November 2016 amid growing sanctions risks due to the initiative of a group of authoritative US senators who submitted a bill with a whole range of anti-Russian measures, including sanctions against the state debt of Russia and Russian state-owned banks.

The dollar exchange rate with “tomorrow” settlements (as of Thursday — Ed.) by 20.51 Moscow time grew by 1.58 rubles, to 65.07 rubles, the euro exchange rate — by 1.87 rubles, to 75.52 rubles, follows from the data of the Moscow exchanges. Earlier on Wednesday, the dollar jumped to 65.2 rubles - the maximum since November 2016, the euro rose in price to 75.58 rubles - the maximum since May 4.

The oil market fell below the level of $72 per barrel in the evening, which added pressure on the ruble. "Black gold", in turn, came under pressure from data from the US Department of Energy on the decline in oil inventories for the week by only 1.4 million barrels, while analysts forecast a reduction of 2.8 million barrels.

New sanctions over the Skripal case

The situation was exacerbated by the US decision to impose new anti-Russian sanctions due to Moscow's alleged use of chemical weapons in Salisbury, which will come into force on August 22. As of 23:59 Moscow time, the dollar rose by 2.05 rubles, to 65.55 rubles, the euro rose by 2.47 rubles, to 76.12 rubles.

The new sanctions announced by the State Department will be divided into two stages. The first part involves a complete ban on exports to Russia electronic devices and components of double value. Prior to the imposition of sanctions, the issue of exporting "sensitive products" (dual-use) was decided on a case-by-case basis.

The second package will enter into force in three months, unless Russia gives guarantees not to use chemical weapons in the future.

Restrictive measures could include a reduction in the level of diplomatic relations, a ban on Russian airline Aeroflot from flying to the US, and a near-total halt to US exports.

"The Case of the Skripals"

In the English city of Salisbury on March 4, according to the British authorities, former GRU officer Sergei Skripal and his daughter Yulia were poisoned, which provoked a major international scandal. London believes that the Russian state was involved in the poisoning of the Skripals with A234, but Moscow categorically denies this.

The United States took the side of its ally, expelling 60 Russian diplomats from the country, but did not formally draw conclusions about the involvement of the Russian Federation in the poisoning.

Two scenarios

Analysts call two scenarios.

In an optimistic scenario, the dollar will inevitably jump under 70 rubles at first, but soon the situation on the market will calm down and the dollar will “return to its place”, to 61-65 rubles or a little higher, Andrey Vernikov, deputy director for investment analysis IC "Zerich Capital Management".

"If Congress bans the purchase of new issues Russian debt, losses for the ruble will be insignificant - within five to seven percent," Andrey Kochetkov, a leading analyst at Otkritie Broker, is sure.

“Under a pessimistic scenario, residents of the United States and their allies will begin to quickly get rid of Russian public debt. This will collapse the bond market. In this case, the exchange rate may fall to 72 rubles per dollar, and then gain a foothold above this mark,” predicts Vernikov.

"If the most negative scenario is realized and sanctions against OFZs are imposed, the ruble may reach 70, the fall will be about 15%," confirms Alexander Razuvaev, director of the analytical department of Alpari.

At the end of 2015 Russian ruble resumed its fall against the US dollar. How and when will it all end?

First of all, it should be said that the fall in world oil prices, coupled with the huge debts of the United States and EU countries, lead to a decline in the economy not only in Russia - suffice it to recall the gradual devaluation of the yuan, which has been carried out by the People's Bank of China since the summer of 2015, the catastrophic fall of the index Dow Jones in the USA in January 2016, as well as the desire of Saudi Arabia to borrow money!

As you can see, all economies in the world are now in a bad situation, only some are really bad, and some are just bad.

Against this background, it should be noted the balanced policy of the Central Bank of the Russian Federation, which carries out a smooth controlled devaluation of the ruble, preventing panic in the market. Smoothness in the fall national currency allows the Russian economy to adapt to some extent to the depreciation of the ruble, trying to find new growth points.

Saudi Arabia, one of the world's largest oil exporters and widely credited with the current oil price crash along with the US, has adopted a 2016 budget that sets an average annual oil price of $29/bbl. It is known from history that the price of oil has the following levels of stability: 38, 29 and 25 USD/barrel. Thus, it is clear that according to Saudi Arabia's forecasts, oil will not cost 25 USD/barrel, but, most likely, its price will fluctuate between 28-30 USD/barrel.

The price of a barrel of oil included in the Russian budget for 2016 is 3150 rubles, that is, the exchange rate of the national currency of the Russian Federation in 2016 can be expected to be about 105-112 rubles / USD. At the same time, the average annual exchange rate of the ruble, calculated at an oil price of 29 USD/barrel, may be 108-110 rubles/USD. Given the balanced policy of the Central Bank of the Russian Federation, which was mentioned earlier, shock scenarios for the fall of the ruble are not to be expected.

Such a low exchange rate of the ruble is expected to reduce Russia's GDP and increase unemployment, which will increase the burden on the budget. According to all forecasts, Russia will only have enough reserves until the middle of 2017, so it is already clear now that they will be spent very, very sparingly, which means that some unsecured emission of rubles and delays in wages should be expected.

But the Russian economy is not in a vacuum - the currencies of different countries are falling in the world, so the general negative global trend will certainly affect the Russian Federation.

Estimated summing up the decline of the economies of Russia and the world, we can add about 20% to the maximum fall of the ruble, that is, at the end of 2016, one should not be surprised at the ruble exchange rate equal to 135 rubles / USD.

The end of 2015 clearly showed that sanctions decisions have become quite popular in the world, so we should expect some tightening of sanctions against Russia by the EU countries and the United States. Such a policy may well add another 10-20% to the expected depreciation, that is, at the end of 2016, the ruble may well cost 150-160 rubles / USD.

As you can see, the Russian economy in 2016, it is quite possible that it will be difficult, but this is all to be expected: a loan is something that needs to be repaid. The essence of the prosperity of many countries of the world in the 2000s is loans, that is, what was already spent yesterday that will only be today. And now this very today has come, in which there is no money, because they were already spent yesterday.