The rise in the ruble is over

There is a stable demand for currency on the Russian market, which pushes up the dollar and euro, while the supply from exporters is no longer enough to restrain this process. Exchange rate of the ruble to the dollar renewed ten-day lows, and the euro, for the first time since May, exceeded 82 rubles.

Why is the ruble falling and how long can it last? Alexander Kuptsikevich, analyst at FxPro, answered Fortrader magazine's question.

- In my opinion, the rebound of the markets is now noticeably stalled. By some indications, professional traders are now mostly selling risky assets, including the ruble. Private investors and central banks are pushing markets up. These are important and powerful drivers, but the actions of the institutions produce noticeable countercurrents. These are manifested in reports of capital outflows from emerging markets.

At the same time domestic demand for the ruble is growing. First, the touch of 68 per dollar in early June and the unsuccessful second attempt to break through that support were perceived as a signal that the ruble's rebound is over.

Further reductions add fuel to the fire key rate from the CBRThe Russian ruble is not only a low export volume, but also a low export volume of oil and gas, which reduces the demand for the ruble on the part of Russian exporters.

It may well turn out that the Russian ruble will indeed continue to decline in the coming weeks. The impulsive market pullback from the March lows is over. It seems that the recovery of business activity is also largely completed, returning to 60-80% from the pre-crisis level. This does not allow counting on a full recovery of the Russian currency positions, because oil revenues and other factors will not be able to fully recover in the foreseeable future.

At the same time, in CBR hints at further rate cuts and a halt to the fall in inflation: this is a big minus for the carry trade outlook. Also on oil, there is a stoppage of growth and an alarming sideways trend: the uptrend since April has already been broken.

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