Yesterday the Russian ruble continued to weaken rapidly against the major reserve currencies against the background of a drop in Brent oil price to $29.5 per barrel. The euro is worth more than 85 rubles for the first time since December 2014. The Chairman of the Board of the National Currency Association (NCA), Dmitry Piskulov, recalls that the Central Bank let the ruble float freely over a year ago. Since then there has been constant fluctuation, swings that are quite strong, the volatility is higher than that of the major world currencies. "68% of our exports, about as much as in Kazakhstan or Norway, are oil and energy. It is a great addiction. Since the beginning of the fall in oil prices, the dollar rose somewhere around 120%. We see a correlation with the oil price, but it is not linear, not a one hundred percent correlation," the expert believes.
Speaking about the immediate prospects, Piskulov said: "I have been working for many years in the markets and I can say that there are two corresponding psychological components in the market – market expectations and market sentiments. The expectations are negative now – we can see in all the analytical reports that oil prices will continue to fall.This is based on some fundamental analysis that the oil storages are filled, that Iran will soon be released onto the oil market, Saudi Arabia is still producing a lot of oil. Although any of these factors may change. Nevertheless, the government is ready for any of the negative expectations that the price will decline, it could fall below $30. This gives rise to negative market sentiments. When people are willing to open short positions, continuing to sell out for each bad news, and frankly are not very responsive to positive news."
In this regard, the expert believes that we will see a rate of 80 rubles to the dollar soon. "We have the first derivative of the oil prices, the ruble still has some slowing in the rate of reaction. However, such a low price of oil has led to problems in the economy. We see this rise in the unemployment rate, and a very large hidden unemployment rate, and a decrease in income, a certain deterioration of living standards," Piskulov said.
According to him, it requires a radical restructuring of the economy, avoiding target exporting. "Within six months oil can push off from the bottom, there will be some positive news. For example, we know that Saudi Arabia has already carefully begun to raise the price of oil for its customers. Some factor in the course of the year will lead to oil prices rising, and it will provide an impetus to the strengthening of the ruble. We could see a rather sharp strengthening of the ruble."
