Forecast of the dollar to ruble exchange rate in Russia for December 2017. What will happen to the currency at the end of the year? Will the dollar collapse? Read the opinions of experts and analysts. The materials were prepared by Natalya Gredina.
Analysts disagree: some predict a bright future for the ruble due to good reviews from rating agencies regarding Russia, rising oil prices and taxes. Others say that all this is a drop in the ocean, and the ruble will continue to weaken, like the Mexican peso, due to Trump's reforms and the newly increased investment attractiveness of the United States. Experts tried to explain what the ruble will be in the outgoing year and whether it was affected by hurricanes and nuclear missiles. NGS.BUSINESS provides data from a focus survey.
What will happen to the dollar in December 2017?
Analysts from Otkritie Broker JSC predict that the Russian currency will strengthen, and the dollar will cost 55 rubles in December. In their opinion, there was no surprise; experts predicted this indicator back in January, that is, the ruble continues to “smoothly” strengthen. Timur Nigmatullin, an analyst at the market analysis department of the Investment Consulting Department of Otkritie Broker JSC, notes that this is due to rising oil prices, as well as due to the large number of ruble bonds purchased by investors, which also affected the exchange rate. Partly, oil prices began to rise after Hurricane Irma, which attacked the United States, he noted.
So far, Russians have not rushed to invest in foreign currency, Nigmatullin states, even despite the turbulent situation in the banking sector and widespread closures of small banks. This is also evidenced by a recent survey by VTsIOM: according to sociologists, in 2017, 29% of Russians named opening a bank account as the most reliable investment (in 2015, this figure was 21%), while at the same time, only 10% of respondents are interested in currency (since 2015). year, trust in her increased among 2% of respondents).
At the end of 2017, the ruble may strengthen
Alpari senior analyst Vadim Iosub believes that the ruble will be supported by positive global ratings and an active tax period in the rest of the year. In particular, the leading rating agency Fitch, one of the “big three” appraisers, published a rating in which Russia has a sufficient level of creditworthiness. “The agency confirmed Russia’s investment grade rating of BBB- and revised its outlook from “stable” to “positive.” Fitch noted the country’s success in economic policy based on a flexible ruble exchange rate, commitment to inflation targeting and a reasonable budget strategy,” Yosub reports in correspondence with NGS.BUSINESS.
The ruble will also strengthen thanks to taxes - the end of the year is the peak period, Iosub notes.
In addition, the strengthening of the ruble will be affected by slowing inflation, due to which investors have increased interest in Russian government securities, he believes. According to Alpari analyst estimates, this week the dollar will cost approximately 56.9-58.1 rubles, and the euro - up to 68.0-69.3 rubles, both currencies continue to fall in price.
Senior analyst at Freedom Finance Investment Company Bogdan Zvarich also argues that the ruble will strengthen due to oil prices, “despite the deterioration of relations between Russia and its Western partners,” possibly referring to the extension of sanctions from the European Union. Nevertheless, today Brent oil costs 2,600-3,400 rubles, he notes. Zvarich believes that, despite cataclysms and other factors, the level of the national currency will still depend only on this price. “And the Russian currency is unlikely to be able to get rid of this factor in the coming years.
Yes, some other factors, in particular political ones, make adjustments to the dynamics of the ruble, but for the most part they are temporary and in the future the ruble returns to the wake of the energy market,” the analyst said.
At the same time, the prices themselves are formed ambiguously, Zvarich noted. They are also affected by the restriction of oil production, which, according to the OPEC agreement, will last until the end of the first quarter of 2018, as well as a decrease in oil reserves in the United States, which, according to analysts, will last until mid-October. “Both of these factors will, to one degree or another, continue to support the energy market until the end of the year. As a result, it is unlikely that Brent oil will be able to go below $50 per barrel and remain below this level for a long time. We also do not expect oil to rise above $60 per barrel. The fact is that such a scenario will stimulate production growth in the United States and will lead to an increase in supply on the market, which will put pressure on prices and will not allow the market to consolidate above this value,” he comments.
Thus, the ruble is unlikely to fall, the analyst concludes. The maximum price of the dollar at the end of the year will be 64 rubles, he believes, but such a scenario is unlikely - most likely, against the backdrop of strengthening oil prices, it will cost 56-57.5 rubles in mid-autumn.
Skeptics: events in the US will push the dollar up
VTB24 analyst Alexey Mikheev is not so sure about the ruble exchange rate and calls it “floating.” The expert agrees that it will mainly depend on oil prices, but does not exclude the influence of the general investment background in the world, including demand for assets of developing countries and the dollar exchange rate on the Forex market. VTB24 expects that by the end of the year investors will switch their attention from these risky assets, and the dollar will eventually begin to rise. “Assets of all types are now at highs for a year or more, markets are overheated towards the dollar. This applies to world stock markets, commodity markets, and currencies of developing and even developed countries,” he notes.
The dollar will definitely rise due to events in the United States, Mikheev notes.
There, the Federal Reserve began tightening monetary policy and has already raised the rate 4 times, but the dollar has only fallen this year, so the risk appetite outweighed. By the end of 2018, analysts expect 4 more Fed rate hikes, while the balance will shrink starting this October, which will certainly strengthen the American currency. A VTB24 analyst gives the most unfavorable forecast for Russians at the end of the year: according to his estimates, the dollar will cost 65 rubles, and the euro - 72 rubles.
Analysts from Alfa-Bank agree with Mikheev; according to their observations, due to the actions of the Fed, the dollar is indeed seriously strengthening. Capital is flowing out of developing, risky markets, the ruble is weakening, and even rising oil prices will not be able to support it, they believe.
“More than six months into Donald Trump’s presidency, it has become clear that the sanctions regime will remain in place for a longer time than might have been expected, in addition, the likelihood of new sanctions is increasing, and the possibility of resuming Russian-American dialogue is beginning to diminish. Although the sanctions affect individuals and companies and do not affect the sovereign level, they still entail a new wave of negativity regarding Russian assets, which could push investors away from the Russian market,” analysts report.
“Even before the new wave of geopolitical tensions, the ruble exchange rate was in an advantageous position compared to the currencies of other developing countries and almost did not react to the May decline in oil prices.
However, even now the ruble is ignoring the recovery in oil prices: although they recently exceeded $60 per barrel, the ruble exchange rate remains under pressure,” experts add.
MOSCOW, January 15 - PRIME, Anna Podlinova. At the beginning of the week, the dollar continued to fall against major currencies, reaching its lowest levels in the last three years. In 2017, the dollar lost an average of 6% against other currencies, say analysts surveyed by the Prime agency. The decline in the dollar is primarily due to the rise in price, which last week broke through the mark of $70 per barrel and continues to remain around this level.
However, experts clarify that the fall of the dollar does not mean that the US economy is heading towards a recession: at this stage, American producers are quite comfortable with the current price of the currency. In addition, the Fed is closely monitoring the dollar exchange rate and is quite capable of making a statement that will support the national currency. In addition, according to analysts, by the end of the year the “American” will still rise from the depths and settle at the level of 60 rubles, unless, of course, additional factors appear for even greater growth.
Reasons for the fall
First of all, the strengthening of the ruble against the dollar and euro is associated with an increase in oil prices to $70 per barrel, says Viktor Veselov, chief analyst at Globex Bank. “This has caused an influx of liquidity into the Russian market due to its commodity component. Thus, foreign investors are rushing to make money while oil prices remain high,” he explains, adding that the ruble will continue to strengthen until the end of January. Moreover, in the first quarter, according to analyst forecasts, the dollar will cost 55 rubles.
This will happen, firstly, due to the tax period, and secondly, due to high oil prices. However, in early February, the introduction of new US sanctions against the Russian Federation is expected, which may temporarily provoke an outflow of foreign liquidity from the Russian market, Veselov clarifies. At the same time, foreign investors will return to Russia due to the high real rate above 5%, he says.
The Russian currency is trading synchronously with other currencies of developing countries, notes Natalia Shilova, director of the center for macroeconomic forecasting at B&N Bank. Since January 12, the Mexican peso has strengthened against the dollar by 0.8%, the Russian ruble - by 0.5%, the Chinese yuan, Malaysian ringgit, Polish zloty - by 0.3-0.5%. “This dynamics is mainly associated with increased investor expectations from the global economy in 2018, which concerns both the demand for commodities and the demand for riskier and more profitable assets,” explains Shilova.
The real effective exchange rate of the ruble in 2017 decreased by 0.9%
She also believes that the ruble will remain strong in January-February, thanks to relatively stable oil prices and a seasonal expansion of the trade balance.
The more noticeable weakening of the dollar against all currencies of emerging markets is also due to the fact that the steps that the Fed will take have largely been taken into account by the market, says Denis Davydov, chief analyst at Nordea Bank. At the same time, the potential for policy tightening from the ECB and some signals from the Bank of Japan to narrow stimulus measures make these currencies more attractive. “So the market is still focused on getting more profit from investing in euros and yen than from investing in the dollar,” he says.
This does not mean that the US economy is heading into recession. “It’s just that the capital market does not see the risks that it saw at the beginning of last year, and takes a more active position in other currencies and assets other than the dollar,” says Davydov. This year, the dollar will decline moderately against the euro, but the potential for its further weakening does not look that deep, the analyst notes. A complete repetition of the situation in 2017, when the dollar lost more than 10% against the euro, is not expected; the movement in the pair could be about 5%, he clarifies.
For a ruble
Nordea Bank's base forecast assumes 61 rubles per dollar at the end of 2018. “Despite the fact that the attractiveness of the ruble will remain, the narrowing of the differential between the rate of the Central Bank of the Russian Federation and the Federal Reserve will make the carry story less attractive,” explains Davydov. If the ruble strengthens, it will not be as strong as in the past year. Also, the activity of market participants will cool the growth of inflation in the second half of the year, he says.
The growth of the ruble is facilitated by the payment of a large volume of insurance payments due today, adds Uralsib chief economist Alexey Devyatov. The strengthening of the euro continues to play against the American currency, associated with the possible resumption of discussions on a more rapid winding down of measures to support the economies of the euro area countries by the ECB, as well as with successful negotiations on the creation of a ruling coalition in Germany, he notes. The average dollar exchange rate this year will be 58 rubles, the expert predicts.
Shilova fully agrees with him, who also expects the dollar to cost 58 rubles on average for the year. In her opinion, the ruble will remain stable due to export growth due to high oil prices. At the same time, the introduction of additional sanctions will limit the influx of foreign investment, she notes. “However, taking into account the fact that in recent years it was already insignificant, in the conditions of a stable raw materials market in 2018, this factor will be of little significance,” says Shilova.
Expectations for Brent
The shortage of oil supply on the world market will push oil prices up in the first quarter of this year, Veselov believes. However, due to the fact that the exit strategy of countries from Russia, in the future this will create a risk of a decrease in the price of “black gold”. According to Globex forecasts, the average annual oil price will be about $68 per barrel.
On average, B&N Bank expects oil prices to stabilize around $60 for the year, says Shilova, noting that a correction is most likely after the first quarter. According to the forecast of Davydov from Nordea Bank, in the base scenario the average annual price of Brent will be $63, and at the end of 2018 it will be at $65.
Uralsib senior analyst Alexey Kokin expects oil prices to decline to around $65 by the end of January, due to increased drilling activity and production in the United States and a reduced assessment of the risk of a return of US sanctions against Iran. The average annual price for Brent, according to Uralsib's forecast, will be $57 per barrel.
Against the ruble
The dynamics of ruble quotes in the coming days will depend on oil prices, which may decline moderately, says Devyatov, noting that an increase in the Ministry of Finance’s operations to purchase foreign currency on the market could play against the ruble. In the medium term, we can expect a moderate weakening of the national currency compared to current quotes due to a correction in oil prices and a gradual decline in non-residents’ interest in ruble assets as a result of a further reduction in the Central Bank’s key rate and an increase in the Fed rate, the economist believes.
Purchases of foreign currency by the Ministry of Finance of the Russian Federation, the introduction of new sanctions against the Russian Federation, and a reduction in the key rate will play against the ruble, agrees Veselov. “These factors will help the dollar strengthen against the ruble,” he says, forecasting the ruble at 59-60 per dollar at the end of 2018.
In general, Davydova notes, at the moment the dollar exchange rate is quite comfortable for the American economy. "Given the US debt, this is a pretty good story. It also makes US producers more competitive," he says. In the future, it is unlikely that the American regulator will allow the dollar to weaken uncontrollably, Davydov sums up.
How to find out: the dollar will rise or fall? Many people are interested in this issue, especially those who make money on the stock exchange. The value of US money is influenced by both external factors (the world economy and state foreign policy) and internal factors (stability within the country). The exchange rate depends mainly on the supply and demand for it. This is the basis of a market economy. An increase in demand for American money leads to an increase in its value, and an increase in supply (issue of money into circulation) leads to a decrease.
Factors of growth and decline
Why is the dollar jumping? The value of American money is due to the high degree of trust in US money throughout its history. Until 1971, the dollar was backed by gold, and its value was fixed. Since 1976, a floating exchange rate has been used, which is determined by the market (by comparing supply and demand). An increase in oil and gold prices leads to a fall in the cost of “green”, since the United States is the main consumer of these resources. The value of American money on the world market is also affected by US participation in military operations. The success of these operations will determine whether or not you fall.
In addition to the above external factors, the price of a currency is greatly influenced by internal factors: an increase in gross domestic product, the level of inflation (decrease in the purchasing power of money), economic development, political situation, trade balance, unemployment. The US trade balance is determined by the ratio of exports and imports. If the ratio falls or rises, it will have a negative impact on the economy. Ideally, this ratio should be zero.
A decrease in the unemployment rate has a beneficial effect on the economy and leads to an increase in the exchange rate. Inflation can be controlled to some extent by issuing and purchasing government securities.
Recently, the volume of investments in the Russian economy has been decreasing. This leads to an outflow of currency, which affects the growth of its value against the ruble. An increase in the value of a currency generates an increased rush to purchase it, as a result of which a shortage of the dollar is formed, again leading to an increase in its exchange rate. As many have noticed, when the price of oil falls, the green rate automatically increases. Why does it happen that if the price of oil falls or rises, then the value of American money falls or rises?
In other countries there is no fixed cost of this money; there the exchange rate is floating, established by comparing supply and demand for it. In the Russian Federation, there is a large link between the ruble and the raw material base, that is, oil. And it is sold on the international market for American money. A fall in the price of a natural resource leads to a shortage of currency and, as a consequence, to an increase in its exchange rate.
Forecast for 2016
If you make a forecast for 2016, wondering where the dollar will go: will it rise or fall, then many experts predict the growth of US money against most other currencies in 2016. In the Russian Federation, the dollar will continue to grow in the summer, but not as actively as at the beginning of the year. This is due to the adaptation of the Russian economy to world oil prices. The value of the national currency, as mentioned earlier, depends on internal factors. The growth of inflation and the ruble money supply, the high level of the key rate (the percentage at which the Central Bank issues loans to commercial banks) have a negative impact on the financial industry as a whole. Thus, stabilization of the exchange rate depends on economic growth and export volumes, which ensures the influx of foreign assets into the state.
It is profitable to buy American currency for vacations and savings
The US dollar fell to record lows in three years against six major world currencies. Against the backdrop of the collapse of the dollar, the euro almost reached its maximum value over the same period. However, as it turned out, even the US authorities do not expect anything good from the dollar; on the contrary, they benefit from a weak national currency. The head of the American Ministry of Finance, Steven Mnuchin, stated this at the World Economic Forum in Davos. Let us remember that recently the Russian authorities also tried to weaken the ruble, supposedly in the interests of the economy. MK asked experts what consequences such maneuvers by financial authorities in relation to national currencies lead to.
The American minister said that he is not worried about the fall of the dollar, noting that a weak currency is good for new trading opportunities. Gold prices have already responded to his statements: an ounce of this metal began to cost $1,350 - a maximum of 4 months.
As for the ruble, the dollar is worth 56.34 against it - 25 kopecks less than yesterday.
"MK" asked several questions about the future fate of the dollar and ruble to financial analysts - Deputy Director of the Analytical Department of Alpari Anna Kokoreva, analyst ALOR BROKER Kirill Yakovenko, chief analyst of TeleTrade Group Peter Pushkarev.
- What factors are bringing down the dollar and to what level can it fall?
A. Kokoreva: Today the dollar is declining due to statements by the US Treasury Secretary that a weak dollar is supporting the economy. The country's monetary authorities, despite the tightening of monetary policy, have repeatedly made it clear to speculators that the country needs a weak dollar, which determined its dynamics for a long time.
K. Yakovenko: I believe that the fall in the dollar exchange rate may end this week, as the dollar-ruble pair has approached a powerful support level: 56-57 rubles. At this level, I believe, the Ministry of Finance (for the National Welfare Fund), the Central Bank (for the gold and foreign exchange reserves), and perhaps the Treasury, which was also recently given the authority to enter the foreign exchange market, would not mind purchasing it.
- Does the fall of the dollar affect the ruble, should we expect the “wooden” one to strengthen?
A. Kokoreva: Yes, it does. If we compare the dollar/ruble and euro/ruble pairs, we will see that due to the fall of the dollar, the ruble is strengthening more actively against the American currency and much more slowly against the euro. All other things being equal, if the dollar continues to decline, the ruble will strengthen against this currency.
P. Pushkarev: The ruble has potential to grow: oil is at $70 per barrel and is not rolling back down. But even if oil gradually drops in price to $63-65 per barrel, it is worth remembering that the dollar dropped to 55 rubles 70 kopecks in 2017, when oil was only $50 or slightly higher. So, at the current level of oil prices, and with a negative attitude towards the dollar on world markets, Russia can expect a dollar at 53-55 rubles, possibly even lower.
- Is it possible to make money from the fall of the dollar: is it worth buying currency or gold?
A. Kokoreva: It’s too late to make money from the fall of the dollar, the trend started a long time ago and you should have gotten into it at the beginning. Current levels are not very good for buying currency.
K. Yakovenko: The price of 56 rubles is attractive both for long-term investors and speculators, because it remained stable in April-May 2017, which means there is a high probability that the rate will bounce off of it now. Moreover, in a week, on December 30 and 31, the next meeting of the US Federal Reserve will take place, at which Janet Yellen will chair for the last time, which means we can expect sharper comments on the results of the meeting and a more aggressive rate increase.
For Russian citizens, macroeconomic factors can be summarized in a simple recommendation: it is profitable to buy the dollar for savings or for vacation as long as it is below 60 rubles. Because even the Ministry of Finance in the long term expects a higher exchange rate in the next few years: in 2017–2020, the average nominal dollar exchange rate, according to the forecast of the Ministry of Finance, will be at the level of 64.8 rubles, in the next 5 years - 71.5 rubles, in 2026–2030 - 77.1 rubles. With this forecast, and also taking into account the experience of sharp devaluations in 1998, 2008, 2014, you can use the moment to buy the dollar.
P. Pushkarev: I would not recommend buying currency in the current conditions: it will most likely cost less. Especially the dollar, since it is also declining significantly on world markets. The dollar exchange rate can jump up only if the United States nevertheless introduces sanctions against foreign purchases of Russian sovereign debt bonds, but even in this case, the dollar jump will most likely be short-term, and no more than 1.5-2 rubles. And having waited out this situation, it would be more correct to sell currencies again rather than buy.
- Analysts insisted that the ruble was about to fall, but it was still afloat. What threatens the Russian national currency?
A. Kokoreva: High oil prices and positive macro statistics support the ruble. The main risk for the ruble now is new sanctions, which may be introduced in February. Perhaps, now this is one of the most important factors that can negatively affect the domestic currency.
Stanislav Werner, head of the analytical department of the financial company Dominion-World: “On the horizon of the whole year, the national currency will weaken. And in the spring this trend will begin to emerge.
The current situation on the oil market reinforces such expectations, but there are hopes that on the eve or after the presidential elections the ruble will still have time to unpleasantly surprise pessimists. However, there will no longer be any serious records.
Unlike the previous year, the Ministry of Finance is more actively buying foreign currency on the domestic foreign exchange market - now prices are tied to the dollar cost of a barrel of oil and the volume of purchases is such that it can cover all foreign exchange earnings from the sale of goods and services abroad.
The end of February may lead to a recovery in oil prices, which will help the ruble temporarily “lick” its wounds. The fact is that US shale oil may cover the entire increase in demand this year, which will slow down and may reverse the process of ridding the market of excessive reserves. Oil prices, which reached $70 per barrel, against this background can drop to $50 per barrel. In the spring, this will be “helped” by seasonal factors in the form of suspension of refinery operations for repairs and the end of the heating season.
From the point of view of capital inflows, the situation is also becoming less optimistic for the ruble - the Bank of Russia lowered the rate from 7.75% to 7.5%, and in March it may lower it again, by 0.25%. This step will make investments in rubles less interesting for foreigners.
Taking into account the current news background, we can assume the following: in March the dollar will reach 58-59 rubles.”
Spring trend - stabilization
Ivan Karyakin, analyst at the investment company Global FX: “There are fewer factors contributing to the weakening of the ruble than factors contributing to its strengthening.
I’ll start with what could hypothetically weaken the ruble. These are geopolitical events, for example, the escalation of the conflict with Ukraine, the risks of new sanctions. The political pressure on Russia from the West and, above all, the United States is not abating, and here lie the main risks for the national currency.
Another factor of pressure on the ruble is the decline in oil prices. But here the ruble has a large margin of safety. Let me remind you that in 2017 the ruble strengthened below 56 rubles per dollar, while the oil price was about 52 dollars per barrel. So oil prices will put pressure on the ruble no earlier than when the cost of a barrel falls below $55. And such a decline in the coming months is unlikely.
On the other hand, the presidential elections and the World Cup can support the ruble. At least until the end of the World Cup, the policy of maintaining the stability of the ruble will be maintained. Plus, we must keep in mind that millions of foreign fans will come to Russia with currency that will be exchanged for rubles. An increase in demand for the Russian currency is equal to an increase in its exchange rate.
If there are no geopolitical surprises, during the year we expect first a gradual strengthening of the ruble by the middle of the year to levels of 52-55 rubles per dollar, and then the same gradual weakening to 56-58 rubles per dollar.”
The ruble will fluctuate in May
Dmitry Zharsky, director of the Veta expert group: “The monetary policy of the US Federal Reserve, aimed at increasing the reserve rate, speaks in favor of the strengthening of the dollar. A higher rate means a stronger currency.
The monetary policy of the Russian Central Bank, on the contrary, is aimed at reducing the key rate. Thus, we get that the gap between the two rates, which ensured the influx of foreign investors using the carry trade scheme, will decrease. In this case, the ruble exchange rate will decline; the dollar will likely strengthen to 65 rubles by mid-March.
Further dynamics of the exchange rate will depend on whether the current president remains for another term. If this happens, financial markets will breathe a sigh of relief, as they will see it as a sign of predictability and continuity of economic policy.
But there will remain pressure factors on the ruble, such as the budget deficit, the pension system deficit, sanctions, the risk of falling oil prices, and the risk of cancellation or non-compliance with the OPEC+ agreement on limiting production.
Let me remind you that the Ministry of Finance itself has a pessimistic view of the ruble exchange rate, predicting a decline in its exchange rate in the coming years: in 2017-2020, the average nominal dollar exchange rate, according to the forecast of the Ministry of Finance, will be at the level of 64.8 rubles, in the next five years - 71, 5 rubles, in 2026-2030 - 77.1 rubles. For the euro, the situation is similar, the economy of the Old World still looks stronger than the Russian one, the euro exchange rate may rise to 73 rubles by mid-March, and to 75 rubles by the end of spring.
And the most difficult month for the ruble will be May, when citizens start planning vacations and buying foreign currency for expenses abroad.”
All hopes for oil
Evgeny Volkov, Head of Brokerage Operations Department of RosEvroBank: “There are hopes for the spring that the ruble will begin to strengthen. The ruble lost ground due to the fall in oil prices, which was caused by an increase in oil production in the United States, as well as a decrease in oil demand due to planned technical work at refineries in the northern hemisphere.
When refineries start operating at full capacity again, the price of oil will begin to stabilize and rise again, pulling the Russian currency with it. There are no stronger growth drivers yet. Even the attractiveness of the Russian currency for foreign investors will not be able to push the ruble to the top with such force.
The expected exchange rate of the ruble in the spring is 55-57.80 rubles per dollar.”