Why the ruble is strengthening at the beginning of 2023: the main reasons and forecast for January are named

The Russian currency is strengthening again.  Surprise?  Not really

The Russian currency is strengthening again. Surprise? Not really

A photo: Shutterstock

Currency swing continues. Speculators are just delighted. Last December, most experts habitually buried the ruble. Like, well, we lived with a strong currency – and that’s enough. For more than six months, about 60 rubles were given for a dollar on the stock exchange. But at the end of the year, several negative events happened at once. The main one is the introduction of new sanctions against our country. In particular, the appearance of a price ceiling for our oil. As a result, the cost of our “black gold” fell sharply. For a barrel of Urals, at first they were given about $50, and now even $40.

Nevertheless, since the beginning of the year, the ruble began to unexpectedly win back losses. Well, how unexpected. Some experts predicted such a scenario in December. One of them is Presidential Aide Maxim Oreshkin. In one of the interviews, he reassured everyone, saying that our currency traditionally strengthens in January. Like, this is due to a good balance of payments (the difference between the state’s income in foreign currency and spending in it). Due to this, the demand for rubles at the beginning of the year increases.

Naturally, then no one believed Oreshkin’s words. You never know what officials say there to reassure the population. Moreover, it makes no sense to compare past January and this one. But the former economy minister was right. No wonder he was a good currency analyst in his time.

There were several objective reasons for the strengthening of the ruble. The first is the behavior of speculators. The market is now more than half controlled by private individuals. And many of them are also analysts, and they also know about the balance of payments. So we decided to play in the strengthening of the ruble. Moreover, many had to fix the good profit received at the end of the year. That is, to sell dollars.

Secondly, the budget rule. It came as a surprise to the market. The Ministry of Finance this week began to sell yuan on the foreign exchange market. And it will do it every day for the next three weeks. This news further dispersed the ruble exchange rate. Because the sale of the Chinese currency indirectly affects the rates of other currencies traded on the Moscow Exchange. As a result, the ruble is also strengthening against the dollar.

In total, by the beginning of February, the Ministry of Finance plans to sell yuan for 55 billion rubles. This is the money that lies in our international reserves. Now they are beginning to be used to cover the budget deficit.

– The decision of the Ministry of Finance to start selling foreign currency is puzzling in light of previous government instructions that the exchange rate range of 70-80 rubles per dollar is a fair and target level in the future. This forecast assumes that the sale should start at the rate of 80 rubles to the dollar rather than 70 rubles to the dollar. In general, the decision to resume the mechanism of the budget rule is positive, but the way this decision is being carried out surprises the market, – said Natalia Orlova, chief economist at Alfa-Bank.

Most experts believe that in January the ruble will be quite strong. For example, it will remain in the range from 65 to 70 rubles per dollar. This will be facilitated by the next tax period, which will begin towards the end of the month. But what happens next is a creative question. Cheap oil will still undermine our currency. Therefore, the most likely this year is the dollar exchange rate in the range of 70 to 90 rubles. But this is probably better to find out from Maxim Oreshkin. We look forward to the next interview.

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