Since the beginning of the week, the dollar has risen in price by more than 6.5 rubles. In addition to falling oil prices, the collapse was provoked by the conversion of dividends, the forced closure of positions and the onset of panic, economists and market participants say

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On Thursday, January 21, the dollar rate soared to almost 86 rubles. This is the highest value since 1998. The previous record was 80.1 rubles. per dollar, which was set on December 16, 2014, was beaten the day before - on Wednesday, January 20.

In the first two hours of trading on Thursday, the dollar rose in price by almost 5 rubles, reaching 85.99 rubles. Then the rate adjusted downward and by 15:00 Moscow time it was about 84.24 rubles. The sharp drop in the ruble exchange rate occurs against the backdrop of falling oil prices: a barrel of Brent has fallen in price by 1.9% since the beginning of the trading day, to $28.3.

An additional impetus for the weakening of the ruble in the market was provided by the forced closure of positions of some players, Sberbank CIB analysts led by Tom Levinson write in their review. Renaissance Capital trader Levon Atanasyan says that since the beginning of the year there have been currency sales on the market. “The volume of supply until Wednesday, January 20, was quite large, and today stop losses began to be triggered (the level at which the transaction is automatically closed to minimize losses to the player), and the ruble came under excessive pressure, the market collapsed,” he said . The trader said that in the afternoon the situation began to stabilize and “cautious currency sales” began.

In addition, dividends paid to shareholders at the beginning of the year are now being converted into dollars and euros, said Dmitry Polevoy, chief economist at ING Bank for Russia and the CIS. That is why the demand for currency has increased. “ These purchases are usually concentrated over time, which, in conditions of limited liquidity, may explain such a rapid weakening of the ruble ,” says Polevoy. According to Sberbank CIB, the amount of funds converted to pay foreign investors amounted to $0.8 billion, and Russian shareholders converted another $1.1 billion amid growing devaluation fears. In just the last few days, shareholders were paid dividends for January-September 2015 for a total of 156 billion rubles. ($2.0 billion).

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Polevoy recalled that in December 2014, the opposite situation was observed on the market: companies needed to pay dividends, and they sold foreign currency, thereby supporting the ruble exchange rate.

Alexander Mühlberger, head of trading on the foreign exchange market of the BCS Federal Group, notes that one of the major players has been purposefully buying currency on the market for the second day. The treasurer of one of the large banks also says that he sees a large buyer of currency in the market. According to him, most likely, this is one of the local banks. At the same time, exporters are still taking a wait-and-see approach, Sberbank CIB experts point out: “And the market found itself in a situation where the supply from sellers of Russian currency was not balanced by applications for its purchase.”

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The fact that the market overcame several psychologically important levels at once led to the acceleration of the negative dynamics of the Russian currency, notes BCS Express expert Ivan Kopeikin. There is panic in the market, he adds.

“We haven’t seen such panic as in December 2014, when banks closed deposits en masse and bought up currency. It is possible that the risks of this scenario will increase noticeably if the dollar reaches 90–100 rubles, although, from our point of view, the population has significantly less opportunities for this,” says Polevoy. According to him, in this case, the Central Bank may try to stabilize the situation by strengthening control over the actions of exporters, state-owned companies and simply large Russian companies in the foreign exchange market. “I think that now the regulator is closely monitoring the behavior of large banks and companies,” Polevoy believes.

The Central Bank is not yet taking active measures to support the currency; According to the regulator, the ruble is winning back the decline in oil prices, adds senior analyst at Uralsib Capital Irina Lebedeva. “It seems to us that the Central Bank will try to stabilize the situation primarily with the help of the interest rate instrument. Instability in the oil market, which has led to a sharp weakening of the ruble, does not allow us to count on a rate cut at the Central Bank meeting at the end of next week, even taking into account the fact that inflation is rapidly slowing. Moreover, we admit that the Central Bank may raise the key rate if the situation on the foreign exchange market gets out of control,” says Irina Lebedeva.

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