Is ruble overvalued?

Sberbank CIB experts said that today the ruble is overvalued, so it may fall in the near future. According to them, the Russian domestic currency may fall to 70-75 rubles per dollar.

Against this background, experts estimate the quotation of a dollar RTS index of about 800 points as fair, TASS reports.

As of 10:52 the dollar reached 69.31 rubles during trading on the Moscow stock exchange.

The deputy chairman of the State Duma Committee on Financial Markets, Anatoly Aksakov, disagreed with the opinion of the experts in an interview with Vestnik Kavkaza. "I think that the ruble is not overvalued or undervalued. Its exchange rate reflects the structure of our economy, its dependence on world oil prices. Oil prices are falling, it means that the ruble is falling too. It's most likely that oil prices will rise in February or March and the ruble will begin to strengthen. All other estimates do not correspond to the market reality. The ruble is freewheeling and obviously now it reflects the oil price that prevailed in the world markets," he said.

An associate professor of stock markets and financial engineering of RANEPA, Vasiliy Yakimkin, in his turn, said that the estimate of Sberbank CIB experts is justified. "Brent is below 71 dollars per barrel now, so the ruble should be slightly above 70 rubles. So, yeah, it is a little bit overvalued," he said.

"The Bank of Russia is carrying out a more sensible policy now. The banks have no such possibility as they did a year or two ago, when they took rubles from the Russian Bank and sold for dollars, stimulating the dollar to rise. Now the Bank of Russia prevents them from doing this," the economist noted.

"However, the quotes of the ruble are dependent on oil by about 70%. And the oil price in the short term cannot be predicted. I do not expect $20 per barrel of Brent in the short term, so I do not think that the ruble will drop so much," Yakimkin predicted.

According to the expert, such a peg to oil prices is not a good thing, because now there is no leverage for the growth of the latter. "There is overproduction in the world, which is an objective reason for the decline in oil prices. Many states and state-owned companies are competing for the markets and therefore they offer a real oil supply with a serious discount. Our Urals oil discount goes up to $6 per barrel. Saudi Arabia also offers discounts, which are $3 lower than the market price. This is increasing pressure on the oil market, the price of oil, and hence on the ruble," he explained.

"Now everyone is waiting for the meeting of the US Federal Reserve System on December 16th. The benchmark interest rate will be raised by 0.25% there with a probability of 80%, and then the dollar will be seriously strengthened in a wide range of currencies. And the ruble is weakening. Therefore, now everyone is trying to convert the ruble into something more reliable. Of course, everyone is converting currencies into the US dollar since the euro's trend to fall. Therefore, in general, I agree with the Sberbank CIB experts that the ruble is a bit overvalued now and it should be sold," Vasily Yakimkin concluded.