1. What will happen to the ruble exchange rate?

We assumed that due to the nervous situation, the dollar exchange rate in September would not be lower than 32 rubles. As of September 27, the official dollar exchange rate was lower and amounted to 31.22 rubles, but players in the Russian foreign exchange market were determined that it would rise.

A peculiarity of the current situation in the Russian foreign exchange market is that the Central Bank formally adheres to the policy of inflation targeting: it makes it clear that it will not interfere particularly with exchange rate fluctuations. This means, first of all, that the bank will not greatly impede the growth of the ruble exchange rate due to the influx of dollar revenues from oil exports into Russia. The Russian Central Bank traditionally called for this from the IMF, making it clear that the Central Bank is preventing the growth of the Russian currency by buying petrodollars into its reserves at the expense of freshly printed rubles, and that is why Russia has such outrageously high inflation. World oil prices are now at a fairly high level, but it cannot be said that they are growing rapidly, so it is difficult for players in the Russian foreign exchange market to bet on the constant growth of the ruble exchange rate under the non-intervention policy of the Central Bank.

It is now difficult for these players to make any bets at all: in the context of the global financial crisis, the fate of the dollar is not clear on both the world and Russian currency markets. Both the American Fed and the ECB are printing money at an accelerated pace, so in theory both the dollar and the euro should become cheaper. On the other hand, the dollar, as the experience of the previous crisis of 2008-2009 shows, tends to rise in price as the only reliable currency in the world. But now it doesn’t seem to be getting more expensive. Let’s not even talk about the fact that in crisis conditions, speculators on any foreign exchange market, be it global or Russian, are somewhat constrained in the means for a truly large-scale game. And without such a game, speculators always prefer the dollar, just in case.

Our forecast: the preferences of speculators will lead to the fact that the dollar in October will not cost less than 31 rubles.

2. What will happen to Russian prices?

Our forecast for September was as follows: consumer nervousness will lead to Russian prices rising by more than 0.1% in September. And so it happened. The final price results for the month have not yet been summed up, however, as of September 24, inflation since the beginning of the month was already 0.5%. At the same time, last year in September there was amazing stability - prices increased by 0.0%. As a result, inflation this year has already reached 5.1% - a noticeable acceleration compared to last year’s 4.6%.

This time, the fruit and vegetable factor did not play a role in Russian inflation, despite the fact that by September 24, prices for potatoes had fallen by 11.7% since the beginning of the month, and white cabbage had fallen by 17.0%. The leaders in price growth in September were chicken eggs (increased in price by 7.1%) and wheat flour (increased in price by less than 5.1%). There was another increase in utility tariffs in September: cold water in Russia rose in price by 2.7%, hot water by 3.2%, heating by 3.6%.

Players in the Russian financial market in September argued that the Central Bank, which raised the interest rate, was apparently trying to curb the growth of inflation. But citizens, naturally, did not think about the interest rate. They simply went shopping and bought goods at the prices at which these goods were sold. And they were forced to put up with the fact that bread, say, from the beginning of the month had risen in price by 2.2%, and chicken meat by 2.4%. The sellers also didn’t think about any interest rates. By raising food prices, they, of course, could explain this by rising food prices around the world: food futures speculators, in the context of the second wave of the global financial crisis, are now investing money in these futures. But they might not have explained it, based on the fact that prices can be raised in any conditions as long as there is demand for goods. And so far there is not enough competition between traders in the market to bring down each other’s prices.

Inflationary inertia also played a role, of course. Since inflation is once again so high this year that it is already causing concern for the Russian authorities, then manufacturers and traders have an excellent excuse for raising prices. Like, you can’t bear losses due to inflation - money is depreciating.

Our forecast: due to inflationary inertia, consumer prices in Russia will increase by 0.7% in October.

3. What will happen to world oil prices?

We predicted that caution would prevent speculators from raising prices above $112 per barrel in September. That's exactly what happened. By September 27, world oil prices had fallen for three days in a row (on that day alone, a barrel of North Sea Brent fell in price by $1.3) and fell to $109.

Justifying their caution and selling oil futures, speculators referred to the further development of the European debt crisis, in particular, to the difficult situation in Spain, where the authorities' plans to try to somehow reduce the budget deficit caused protests from citizens and led to unrest. In September, it was still unclear whether Greece would receive the next tranche of European aid, and oil speculators had the opportunity to play on the country's prospects for leaving the euro zone.

Of course, those who wish have every opportunity to play not to reduce, but to increase oil futures quotes. International tensions around the Iranian nuclear program have not gone away, and in such a situation one can always imagine that it will end with an oil shortage on the world market. The Fed and ECB are printing money at a rapid pace, and eventually some of this money ends up in the oil market. If there is a lot of money, oil is quite capable of rising in price.

Our forecast: in October, speculators will not dare to sell off oil futures, and the price of oil will be above $100.

4. What will happen to the dollar/euro exchange rate?

In our forecast for September, we noted that due to speculators’ faith in the dollar, the euro will not cost more than $1.25. As of September 27, we somewhat underestimated the willingness of speculators to sometimes play for a rise in the euro: they gave $1.28 for the single European currency. But by the end of September, speculators showed that the game to increase the euro, built on the theoretical possibility of overcoming the European debt crisis, is short-lived. In particular, on September 27, speculators sold the single European currency, citing mass protests by citizens of Greece and Spain against the regime of fiscal austerity. Among other things, the global foreign exchange market continues to monitor the situation on the oil market. Speculators continue to proceed from the assumption that a fall in oil prices should lead to an increase in the dollar and vice versa. At the same time, no one goes into the reasons for this inverse relationship between the exchange rate and prices; it’s just that when the price of oil falls, dollars begin to be bought. This is exactly what happened, say, on September 27: both oil fell in price and the dollar rose in price.

Essentially, the point is that both oil and the euro are risky assets that should be disposed of at any sign of a deepening global financial crisis. These assets are sold for money, and only American dollars are considered money. What's different about oil is that geopolitical tensions can cause disruptions in its supply, a circumstance that forces oil speculators not to be in too much of a hurry to sell off futures. Paradoxically, this supports the euro, the supply of which cannot be interrupted under the current ultra-soft policy of the ECB. Currency speculators are also in no hurry to sell off the single currency.

Our forecast: due to the caution of speculators, the euro will not be cheaper than $1.23 in October.

Experts

Andrey Movchan, managing partner of Third Rome Management Company:

1. We should expect a depreciation of the ruble. This will be related to movements in the currency market. Additionally, October is tax month. The ruble will decrease slightly - to 32.3-32.7 rubles/$.

2. In October, fuel comes into play and summer food prices begin to rise. Inflation will be slightly higher than in September - maybe by 0.5%. But at the end of the year it will remain within 7%.

3. Oil prices have nowhere to go. They have been in the current corridor for quite some time. There will be no triggers that can bring them down. September indicators will remain, plus or minus 5-7%.

4. The euro has just risen by almost 10% solely on the news that Europe will not die. Now this wave will subside a little, everyone will calm down, and we will see a gradual rise in the dollar and a decline in the euro. At the end of October, the ratio is likely to be $1.27-1.28 per euro.

Natalya Burykina, Chairman of the State Duma Committee on the Financial Market:

1. Most likely, the average value in October is approximately 31.75 rubles/$. The ruble exchange rate will fluctuate; it is unstable during this period. Instability in oil prices is having an impact, and the final figure for the Russian currency will depend on them.

2. Inflation in October will consolidate at the level of 0.6-0.7%. The postponement of a number of decisions on tariffs to the summer creates an increased inflationary background. Annual inflation will be 6-7%.

3. The price of $110 per barrel of North Sea Brent will last a couple more weeks, but I cannot predict what will happen at the end of October - the situation is too unstable. But in general, prices will fall.

4. The ratio will be $1.25 per euro. The ECB does not benefit from a weak euro, especially in connection with the problems of the PIGS countries, there is no point in talking about its growth.

Evgeny Gavrilenkov, Managing Director, Chief Economist of Troika Dialog Investment Company:

1. We can expect a slight strengthening of the dollar, since the markets have already played out the third quantitative easing. Due to the problems of Greece, a temporary strengthening of the dollar is possible. The ruble could be around 32 rubles/$ or even a little weaker.

2. The inflation rate will not change significantly. Now it is 0.1% per week. There was a summer disturbance, but the inflation trend of 0.1% per week has persisted for 18 months, except for June-August. I don't know what would have caused prices to accelerate in October.

3. The price of oil will fluctuate between $107-115 per barrel. There are no factors that could influence the price under the influence of certain global rumors.

4. In October, negative news should soon come from Europe, and will be associated with a delay in making agreed decisions on Greece and the banking union. Therefore, a slight strengthening of the dollar to $1.27 per euro is possible.

Natalya Akindinova, director of the Development Center of the Higher School of Economics:

1. There will be no weakening of the ruble in October, because there is still an effect from the introduced amount of easing. In the fall, the ruble will fluctuate within small limits. Then it will most likely weaken, but now the exchange rate will be about 31 rubles/$.

2. Inflation will remain at the current level. Now the effect of rising tariffs and rising world food prices has begun, and for us these factors are decisive in the dynamics of inflation. In October, inflation will be at 1%.

3. You should not expect a sharp drop in prices. The influx of liquidity in all markets will support oil prices at a fairly high level. And the big players said they would increase offers so as not to reduce prices.

4. The dollar/euro ratio will remain at the same level. I don’t think that the presidential elections in the United States can have any impact on dollar/euro fluctuations. Fundamentally, the situation in both the US and Europe is not good. But now it seems that Europe is weaker.

Magazine "Kommersant Vlast" No. 39 dated 01.10.2012, page 30

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