Translated by Ollie Richardson for Fort Russ
21st January, 2016
The dollar on the Moscow exchange for the first time since its denomination in 1998 exceeded 84 rubles, rising to a maximum of 84,81 RUB, moving 3.41 rubles, or 4,19%, above the closing level yesterday.
The Euro for the first half hour of trading also grew by more than 3 rubles. The maximum value of the single European currency rose to 92,555 rubles, which is 3,909 rubles, or 4.4%, above the closing level of the previous trading session. However, the historic high rate of the Euro has not yet arrived: December 16, 2014 the cost of the single European currency rose to 100,74 rubles.
Head of trading of IR Syetems “Aton”, Yaroslav Podsevatkin, said that “the market was broken” after the holidays. “One would expect such a reaction. I wouldn’t be surprised if the currency will jump in the range of 85-100 rubles to the dollar. Then it all depends on the reaction of the Central Bank”, — said Podsevatkin. However, other experts still do not expect intervention from the Central Bank.
“Despite the fears of market participants awaiting the beginning of the interventions of the Central Bank and of monetary policy tightening near the mark of 90 rubles/$, the Bank of Russia is unlikely to intervene for now. According to the Central Bank, the trend towards weakening of the ruble amid falling global oil prices is of an objective nature. The regulator sees no risks to financial stability in the current environment and noted that the adjustment of the ruble is going smoothly, in a comfortable situation with the ruble and foreign currency liquidity”, — noted the report of ROSBANK.
The same opinion is shared by ING chief economist Dmitry Polevoy, who said although the Central Bank monitors the situation, despite the emergence of panic in the market and among the public to intervene, it most likely will not.
“No action can stop the cause of the weakening of the ruble, which is the reducing of oil. And due to a sharp fall in the income of the public, the reaction is unlikely to be comparable with 2014. Meanwhile, the ruble continues to fall sharply, which could be due to forced closure of speculative positions. The causes of this traffic is local, given the sharp rise in the ruble price of oil”, noted Polevoy.
Trader for “Opening”, Sergey Fishgoyt, links the sharp drop in the ruble with yesterday’s statement by the head of the Central Bank, Elvira Nabiullina, who at the moment the dollar rose to 82 rubles, said that the ruble exchange rate is close to the fundamental value that the Central Bank plans to intervene on only in case of threat to financial stability.
“Players listened to the words of Nabiullina, the regulator will not step in and intervene,” says Fishgoyt. According to the trader, the market situation is close to panic, the players try to hold dollars and euros. “Do not be surprised if soon the population will run to the exchangers, like last year,” warned Fishgoyt.
As was noted by a trader from Sberbank CIB, Cole Akeson, yesterday the ruble against the dollar hit a low, last recorded in December 2014, which was considered as an important psychological and technical level.
“The market triggered automatic restrictions on the exercise of trades, and our analysts at the foreign exchange market saw signs that there was an increased willingness to purchase foreign currency,” he wrote in his review.
Head of trading on the foreign exchange market FG BCS, Alexander Mulberger, notes that one of the major players of the second day was purposefully buying foreign currency.
“All are in a state of near panic. The markets are down, oil stays below $28,” — said the chief expert of the center for economic forecasting of Gazprombank, Yegor Susin. According to him, the players ‘ reaction was expected, as the ruble remained overvalued at the beginning of the year compared to the cost of a barrel.
“Now we see that the ruble has rolled back to a fair price. I think that in the first quarter this will not be the last fluctuation of the national currency”, — said Susin.
The collapse of the ruble happened against the background of a small decline in world oil prices. During today’s trading on the stock exchange ICE futures price for Brent oil for delivery in March 2016 fell to $27,54, just 1% below the closing level yesterday.
By 10:45 Moscow time the March futures price for Brent crude on the ICE stock exchange was $27,59 per barrel and the value of the dollar on the Moscow stock exchange — 83,948 rubles., the Euro — 91,584 RUB.
The official dollar exchange rate from January 21 to February 2016 was a CBR level of 79,4614 rubles, the official Euro exchange rate — RUB 87,0314
In turn the President of Russia Vladimir Putin, speaking at the all-Russian forum of entrepreneurs, organized by the organization “Support of Russia”, expressed optimism that the fall of the ruble opens “additional features” for Russian businessmen.