Does the ruble continue to seek lowest rate?

Despite the very positive autumn forecasts, the ruble continues to weaken. The official dollar rate for the weekend and Monday beat the high again, reaching 71 rubles 32 kopecks. Thus, the dollar's value rose immediately by 74 kopecks, reaching historic highs. The currency basket of 0.55 dollars and 0.45 euros has increased by 73.4 kopecks and amounted to 74.06 rubles, according to the website of the CBR. The price per dollar was higher only in the previous century, in December 1997, that is, until the moment of denomination.

There are a lot of objective reasons for this, their number and the total effect is enhanced. Blows to the ruble, which is dependent on raw materials, were given by OPEC's decision not to reduce the quota of oil and the raising of the key rates by the US Federal Reserve. It is the perfect backdrop for the dollar to become stronger.

What else is there to expect from the ruble by the end of the year, how long will the Russian currency remain at record lows and will a cheap ruble be beneficial for the Russian economy, Vestnik Kavkaza asked the experts of the Russian Presidential Academy of National Economy and Public Administration (RANHiGS).

As the leading researcher of the Center for the Study of Central Banks RANHiGS, Pavel Trunin, said in an interview with the correspondent of Vestnik Kavkaza, today the official exchange rate reached a historic low, and this, of course, is primarily due to the oil prices, which are now also at a low level.

"The further dynamics of the rate will also depend on the dynamics of oil prices, which are very difficult to forecast. In principle, so far a rate of a hundred rubles to the dollar looks quite unlikely, because this means the oil price should fall below $20 a barrel. Although, in principle, this is a possibility,’’ the expert said.

Talking about how profitable cheap ruble and the Russian economy can be asserted at the end of the year, whether 100% devaluation of the ruble went to Russia for the benefit of, the leading researcher at the Center for the Study of the Central Banks noted that this opinion did exist and still exists today.

"But we have always believed that this is not quite true. The fact is that the Russian economy in recent years has become largely dependent on imported raw materials, on imported parts, imported consumer goods and, of course, there is a significant rise in prices that affected the the dynamics of Russian GDP. Therefore, the large-scale devaluation which occurred in late 2014-early 2015, has had a rather negative effect on our economy,’’ Pavel Trunin said.

A researcher at the Research Center for Structural Studies of the Institute of Applied Economic Research RANHiGS, Mikhail Khromov, was more cautious in his forecasts, noting that he does not tie in to any particular exchange rate or numbers.

"The value of the exchange rate is determined by the dynamics of oil prices through the inflow of currency into the country and through the budgetary process. That is, demand for the ruble over the demand for foreign currency. Therefore, the current weakening of, shall we say, the current round of the ruble depreciation, reflects the low level of world oil prices. Respectively, if the oil price falls further, then we have a chance to see a further depreciation of the Russian currency," the expert said.

When asked why a year ago the dollar was also about 70 rubles and the price of oil was about $50, but now the oil prices are below $40, but the ruble against the dollar remains at the same level, the researcher of the Research Center for Structural Studies of the Institute of Applied Economic Research said that there is no direct link.

"We also have a so-called rule that the ruble price of oil should remain the same, but in fact this is not satisfied. And it depends on the percentage of the oil drop – if it falls, then the ruble should fall, but this does not happen. It's just some trends that show that with the fall of oil prices, the volume of earnings of Russian companies reduces, respectively, the supply of the currency on the Russian currency market reduces, respectively, there is pressure on the value of the ruble. That is, the dollar on the Russian currency market is becoming rarer and it is becoming more expensive. There is no direct relation,’’  Mikhail Khromov concluded.