February 14, 2017, 23:39 / Finance Exclusively by subscription

The dollar and euro continue to fall in price

Since the beginning of the year, the European and American currencies have lost 2.7 and 3.5 rubles, respectively Ilya Usov The ruble was helped by oil prices and the Central Bank’s promises not to reduce the rate / E. Razumny / Vedomosti

The euro and dollar have been falling in price against the ruble for five trading sessions in a row. On Tuesday, by 14.14 Moscow time, the euro exchange rate for “tomorrow” settlements on the Moscow Exchange dropped below 61 rubles. - for the first time since June 2015. The dollar also lost in price: during the day it traded in the range of 57.3–57.7 rubles. By 19.00 Moscow time, the price for American currency was 57.5 rubles, which is 50 kopecks. less compared to the close of trading on Monday. The euro cost 60.8 rubles. - by 70 kopecks. less closure. Since the beginning of the year, the dollar has lost 3.5 rubles, and the European currency - 2.7 rubles.

Oil on Tuesday by 19.00 Moscow time rose slightly in price: prices for April futures for the delivery of a barrel of Brent rose by 1.3% to $56.3, WTI rose by 0.5% to $53.4. However, according to Sberbank President German Gref, the ruble exchange rate is now being decoupled from the price of oil: the dependence is “gradually becoming indirect” (quote from Interfax). On Monday, the price of oil fell, and the ruble strengthened, he gave an example.

But for now, the high price of oil continues to affect the ruble, says Sergei Suverov, an analyst at BK-Sberezheniya Management Company. Other factors include statements by the Central Bank that it will hesitate to lower rates, as well as words from the Donald Trump administration in favor of a weak dollar, Suverov says. The beginning of the tax period also plays in favor of the ruble: according to a forecast from Bloomberg, based on surveys of banking economists, the main tax payments in February could amount to 1.11 trillion rubles. ($19.1 billion). “These factors, with the exception of the tax period, are not overnight,” Suverov points out.

“The main driver is the Central Bank’s promise to keep the key rate at 10% for a long time,” agrees portfolio manager of Capital Management Company Dmitry Postolenko. However, he believes that the fundamental reasons for the strengthening of the ruble have been exhausted: “Speculative growth of the ruble is possible when investors panicky close positions, selling the dollar, and the population sells currency in banks.” Representatives of VTB 24 and Binbank said that so far they see a 20% increase in demand for cash dollars. A representative of VTB 24 says that the sale of dollars is at a standard level. Svyaz-Bank and Globex did not notice an increased demand for rubles.

Soon the market may see an equally rapid fall in the ruble: when it begins to weaken, speculators will close their positions by selling the ruble. This could be a sharp rebound to 59–60 rubles/$, Postolenko believes.

Suverov expects a reversal only in the second half of the year. Its reasons will be a reduction in the Central Bank rate, a drop in oil prices due to the growth of shale production in the United States, as well as an increase in production in Libya and Nigeria. Analysts at Sberbank CIB write in their review that oil prices may fall earlier: “Profit fixation will occur, and the rapid closure of a large number of long positions may trigger a sharp drop in prices.” The longer oil costs $54–57 per barrel, the higher the likelihood of a domino effect after the withdrawal of funds begins, they say.

The currency interventions of the Ministry of Finance, which the department began last week, also play against the ruble. But Gref believes that currency purchases do not have a strong impact on the exchange rate. “If the price of oil remains at today’s level, then the volume of currency purchases could amount to approximately $20–22 billion,” he said. “The impact on the ruble exchange rate is 1.5–2 rubles, this is the maximum,” says Gref.