The depreciation of the ruble against the dollar raises many questions
August is traditionally a problem month for the currencies of developing countries, and the Russian currency starts the last month of summer in a rather bad position. The ruble has been falling against the major world currencies for more than 10 days in a row. For the first time since March, the Euro crossed the 87-ruble mark, while the dollar is now above 74 rubles, which is the highest level since May 14.
Why is the ruble getting cheaper? How long can it last, and to what marks can the ruble reach? Alexander Kuptsikevich, analyst at FxPro, answered Fortrader magazine's question.
- The ruble lost 4% to the dollar and about 10% to the euro in July. The ruble's sell-off was strong, especially against the euro, and last week was also dangerously single-digit. The ruble ignored changes in sentiment in world markets, remaining under pressure. Even a significant drop in the dollar against most developed-country peers failed to provide a respite for the Russian currency.
The ruble's decline against the euro it is not difficult to explain the latter's surge against most competitors. Behind the increased demand is a wide range of factors from the actions of the Swiss National Bank to the reaction of the support program agreed by EU members.
Why?
But the decline of the ruble against the dollar raises a lot of questions. It was one of the worst months for the dollar in modern history. Against the euro, it lost about 6%, while strengthening against the ruble by 4%.
It's not about oil either: it added almost 5% over the month. True, its quotes clearly stalled in the second half of the month, but this weakly justifies the failure of the ruble.
It seems that the reasons should be looked for in internal factors. Even more importantly, they promise to maintain their strength in the near future, sending the ruble looking for a new bottom.
The Russian Central Bank continued to cut key rateThe bank lowered it by another 0.25 percentage points, making it clear that there might be more reductions. This has reduced investor interest in ruble-denominated assets. The RF Ministry of Finance began to experience more and more problems with the placement of new loans, which was not the case in previous months.
Such dynamics gives rise to dangerous premonitions on the eve of August - traditionally a month of increased volatility in the markets and memorable for the ruble.
80 rubles per dollar by the end of the year
RUB/USD exchange rate
If the dollar is ripe to retaliate, then USDRUB could go even higher than the current 74 and lock it in the 75-80 range by the end of the year. It is rare for the U.S. currency to move so unilaterally and unilaterally, so a corrective pullback may occur sooner rather than later.
Euro to ruble exchange rate
In August, the ruble will probably be able to regain some ground against the euro, as the latter looks overbought. It is quite possible that the pair will return to 85.