USD/RUB: more likely 75 rubles per dollar than revaluation

We considered the factors of a sharp weakening of the ruble, identifying 3 key causes: the "pumping" of liquidity (Russian QE), the deterioration of current account indicators, the emotional and speculative factor.

Among these factors, economists particularly emphasize the balance of payments indicators, which are decisive in the current exchange rate movement. This is not surprising, given the fact that in January the RF Ministry of Finance revived the budget rule, according to which the annual excess of oil and gas revenues over the Rb 8 trillion mark (read: improvement of the current account) will mean the direction of "excess revenues" for the purchase of foreign currency (pressure on the ruble). Otherwise (deterioration of the balance of payments), the deficit will be closed by selling foreign currency from the Sovereign Wealth Fund (amounting to almost 310 billion yuan).

Given the widened spread between the benchmark (Brent) and Urals, it is clear that the key factor supporting the national currency now is the gradually shrinking SNF, and it is a matter of time. And here we are back to the good old peg to oil prices, just as before the CHF, however, this time the situation looks a bit different.

The fact is that the exchange rate peg has become quite politicized and polarized in the two main "power places" - India and China. Despite the fact that these countries have not joined the introduced , the resulting spread of about $25 per barrel is a kind of risk fee (e.g., the risk of falling under secondary sanctions).

Will the spread continue to widen? In my opinion, this is quite an important question right now. For now, I continue to have a positive view of the oil market and expect prices to continue to rise. If the spread does not widen, the budget deficit will shrink, but according to the revived rule, the Ministry of Finance will have to switch to buying the yuan. Taking into account constantly renewed export restrictions (e.g. restrictions on the purchase of petroleum products from Russia are introduced starting 05.02), the ruble may continue to "slip" to the $73-$75 level.

The situation will look much worse in the long run, when either the discount on Russian oil will increase, or prices on world markets will stagnate at previous levels, or fall. In this case, measures to sell foreign currency will initially have a positive impact on the ruble exchange rate, but with the process of gradual drying up of the SWF, USDRUB may quite quickly reach $80 or even higher.

I continue to remain moderately pessimistic about the exchange rate of the domestic currency. I think the probability of continuation of movement towards $75 is significantly higher than the possibility of revaluation.

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