– In recent weeks, the ruble exchange rate has generally been rolling down, setting new anti-records against the dollar and euro. What caused such a shocking sinking of the “wooden” one?
– It is worth highlighting three main reasons that have had the greatest impact on the exchange rates of both developed and developing countries, including Russia.
First, the leaders of the world economy have come to terms with the fact that a second wave of coronavirus is inevitable. Back in the middle of summer, it was possible to build ghostly illusions about the successful overcoming of the most acute phase of the disease, but now, when the number of those who have contracted the virus is rapidly growing again, it is safe to assume that the new blow of the pandemic will be more painful than the first.
Another lockdown (another word that had to be learned after the coronavirus!) Means the re-introduction of the lockdown regime for a significant proportion of the working-age population of the planet. The resumption of quarantine measures will lead to a decrease in demand for oil, on the quotations of which the state of the Russian economy largely depends. In this regard, the second fundamental factor currently determining the ruble exchange rate is traditionally the situation in the commodity market. Here, too, everything is ambiguous. On the one hand, the participants in the OPEC transaction and other major producers of “black gold” report on the achievement of one hundred percent results in the deal to limit the extraction of raw materials; on the other hand, Libya and Iran are increasing their capacities, while energy reserves are growing in the United States. Therefore, if at the beginning of the year the cost of a barrel exceeded $ 45, now the “barrel” is valued below $ 40.
The third reason for the weakening of the ruble was the threat of new US sanctions against Russia, which may be imposed in connection with the situation around Navalny. A number of politicians from Washington are acting under slogans calling for the use of the most severe economic restrictions against Moscow. If Joe Biden, who is extremely aggressive towards our country, is elected as the new president of the United States, sanctions pressure will intensify and ruble assets will immediately depreciate.
– How will such circumstances as the escalation of the Armenian-Azerbaijani conflict in Karabakh or the coronavirus disease of Danald Trump and his wife affect the rate of the Russian currency?
– Geopolitical risks certainly have a serious impact on the exchange rate dynamics of developing countries. With the aggravation of the geopolitical situation, investors form a clear sense of uncertainty, which pushes them to exit risky assets. The ruble belongs to the latter. Our currency is potentially weak. Sometimes it may seem that it is getting stronger, but this is temporary. Therefore, the factor of what is happening in Nagorno-Karabakh has little effect on the ruble. At the same time, if the conflict grows, then the rate of our national currency risks seriously suffering.
Trump’s positive coronavirus test can also be interpreted in two ways: being infected with a universal disease that spares neither the rich man nor the beggar can bring him closer to voters, or it can become a path to a cruel failure. In the eyes of the investor, both are the reasons for the growing uncertainty. When they start shooting in remote and unstable regions, the economies of neighboring states or those whose financial interests are closely related to the losing side “get sick”. If the President of the United States is in a fever, then the entire American economy “falls ill”, and after it other major financial systems of the world. The influence of such factors should not be exaggerated, but they should not be underestimated either.
– Do the Russian government and the Central Bank have the ability to support the ruble exchange rate? Will officials save the “wooden” one, or is it more profitable for them to have an expensive currency than a strong ruble?
– The Bank of Russia did not include in its calculations the forecast that in October the euro will cost more than 90 rubles. Of course, our authorities will try to stabilize the current situation. Large-scale sale of currency on the stock exchange will again become the main instrument. The government will find funds for these interventions. During the coronavirus, international reserves not only did not decrease, but even increased slightly: from April to June, they increased by $ 3 billion to $ 566 billion.
However, we must not forget that this tool can be used with extreme caution and only for the time being. Even in the previous crisis, many experts urged: “There is no need to burn up reserves.” If the leaders of the financial block understand that foreign exchange interventions are not able to stop the fall of the ruble, the sale of dollars and euros will stop. Then the ruble may collapse sharply again – other powerful factors will act: sanctions or a fall in oil prices below $ 30 per barrel. In such circumstances, no amount of intervention will stabilize the situation.
– Does the monetary policy of the Central Bank, which persistently lowers its key rate during a pandemic, somehow affect the ruble exchange rate?
– Indeed, the Central Bank has been steadily reducing the key rate lately. In June, this indicator dropped to 4.5%, now it is already 4.25%. It seems that the idea is correct – lowering interest rates on loans to revive the economy. However, this policy also became one of the steps to weaken the ruble. Perhaps the Russian financial authorities thought: “It’s okay if we weaken the ruble a little, because there is not enough money in the budget, it is in deficit this year.” However, they could not keep the situation, and the fall of the ruble acquired an avalanche-like character: at such a rate, speculation with the ruble became unattractive, and foreign holders of our country’s treasury bonds began to sell Russian securities even more actively.
And when the mark of 90 rubles per euro was exceeded, a psychological factor began to act on the exchange players: 100 rubles for a “European” and 85 rubles for an “American” from a fantastic, previously seemed impossible, milestone turned into a kind of benchmark that investors began to lay into your business plans. This means that these milestones will be overcome by the end of the year.
– What should ordinary consumers do under the current conditions? First of all, the readers of “MK” are interested in whether it is worthwhile to urgently exchange currency, and also what is more profitable to keep savings now – in rubles or dollars?
– Unfortunately. lately, most Russians no longer ask themselves the question of “how to spend their money,” but try to preserve their savings with the least loss. Those who in our country have managed to accumulate at least a small amount are few, while the majority have enough money only for basic food. In Russia, in the second quarter of 2020, the real disposable money income of the population in annual terms decreased by 8%. Let me remind you that this indicator has been falling in our country for many years, in 2018–2019 there was a slight stabilization, and one could count on an improvement in the situation. But the coronavirus crisis began, and many residents of our country were left without savings at all.
Nevertheless, you can give several recommendations on how to deal with the remaining savings. Since it is obvious that a stable tendency for the ruble to fall has formed, you can safely buy the currency. However, you should not buy dollars and euros when there is a strong weakening of the ruble – the “wooden” rate does not fall linearly, but according to the principle “one step forward, two back”. Therefore, to buy foreign currency, it is better to wait until the ruble stabilizes and even grows. As for the question, is it more profitable to cash out money: in dollars or rubles? If you are not going to immediately go to the store and spend the withdrawn amount, then it is better to withdraw in foreign currency. After all, you can gradually exchange dollars and spend them as needed.
– Are there any alternative options for saving savings besides buying currency?
– An excellent option is real estate, as well as mortgages, since rates have now dropped to a fairly decent level. You will need to pay for the mortgage in rubles. If a person has enough money to buy real estate on a mortgage, then you can be happy for him. This is a very good investment. However, there are not many owners of the required amount in Russia. Another attractive asset is gold, whose quotes will continue to rise in price in the future. However, for many of our compatriots, the “yellow metal” is still not a very clear asset, so they should still choose real estate.
– And what about technology: mobile, TV, computers?
– I would not recommend making such purchases en masse. Let’s remember: during previous crises, many Russians actively bought refrigerators, televisions, music centers, and then thought about what to do with expensive, but unnecessary things. It’s another matter if a person has long planned to update any imported equipment in his home, then now is the time to do it. Retailers have already begun to revise their prices: it is obvious that if previously the cost of goods was determined at the euro rate of 80 rubles, and now – at 90 rubles, then retail prices will definitely increase significantly.
– The reader, whose income is much more modest, asks: isn’t it time to buy buckwheat, sugar and vegetables. Will the depreciation of the ruble lead to an increase in food prices?
– Indeed, everyone understands that if the ruble weakens, then this affects inflation. But I would not run to buy buckwheat. The Russian market economy, whatever you think about it, is flexible enough and quickly adapts to new conditions. And in this difficult period for Russia, agricultural production in our country did not develop so badly. Moreover, domestic farmers are significantly increasing sales of their products abroad. The export of agricultural products exceeded foreign gas supplies: in January-July 2020, food was exported from Russia in the amount of $ 14.7 billion, and gas – $ 12.5 billion. This is an additional argument in favor of the fact that the Russians will not experience a shortage with food, food prices will not grow critically. Therefore, you should not urgently empty store shelves.
– You predict that by the end of the year the euro will rise in price to 100 rubles, and the dollar – to 85–90 rubles. How long can the devaluation period drag on?
– Long-term forecasting of the Russian currency exchange rate is an extremely thankless task. Practice shows that in any situation there is always a number of factors that negatively affect the value of the ruble. After the New Year, the utmost attention will need to be paid to the sanctions that Washington promises to impose, oil prices that are in danger of sinking. The demand for “black gold” has not recovered. It will be possible to predict when consumption of raw materials will return to the level of the beginning of 2020 in the coming months, but already now we can say that this will not happen in the foreseeable future. Therefore, no illusions are needed: the ruble will continue to fall for a long time.