Ruble continues prolonged drop

Today, at the beginning of trading on the Moscow stock exchange, the US dollar and euro slightly dropped, the ruble slightly gained against the bi-currency basket against the backgroud of a corrective upward bounce in world oil prices, but then continued to fall against the background of the still unsuccessful attempts by oil to cling to a level of 50 dollars per barrel of Brent crude.

As the Associate Professor of the Stock markets and Financial Engineering Department of RANHiGS Vasily Yakimkin explained in an interview with a correspondent of Vestnik Kavkaza, the fall of the ruble is mainly due to pressure on oil.

"Somewhere around 60% is incorporated there, as well as with the general conjuncture, Central Bank policy: instead of raising stakes, Bank of Russia lowers it, making a strategic mistake. Plus, recession in the country, plus the external is about to be strengthened, the Americans have already strengthened it, Europeans, Japanese, Canadians, everyone is looking at them. That is why, accordingly, there is such an unfavorable external environment. Plus, a very important point is that September 17 is getting closer and closer, when the US Federal Reserve may raise this stake. It is also very bad for the ruble, for emerging markets currencies, so overall, emerging markets currencies are now under pressure. And to somehow neutralize this pressure, for example, the Bank of Mexico buys the Mexican peso, selling 200 million dollars every day. For a country like Mexico it is quite a lot, those are big sales. And our bank also should act like this," the expert stated.

"The Bank of Brazil raised the stakes last week by 0.5% and our bank lowered the stakes. I think this is wrong. In other words, in the end it puts pressure on the ruble. But pressure on the ruble will apparently continue, as it is beneficial to the Ministry of Finance because of different budgetary rules: that is, the weaker the ruble, the greater the opportunities of the Finance Ministry, by selling dollars to fill the budget deficit. Therefore, every fall of the ruble adds a couple of dozen billion rubles, and the budget is feeling well," the financier said.

"I think that the predictions, of course, will be very different, because the situation is a little vague," a leading researcher at the Institute of Applied Economic Research of RANHiGS Alexander Abramov said, answering a question of our correspondent about how long the fall of the national currency will last and what to expect from the ruble in the next month or two,.

"It seems to me that, while the continuing fall of the ruble is due to the fact that the price of oil is dropping and the Central Bank does not interfere in rate fixing too much today until it sees a decline in oil prices, because playing against the market when oil declines is probably pointless – even the CB will not steady the ruble too much. It seems that the CB is waiting for the moment when oil prices hit the bottom, and then, in my opinion, it will hold the ruble through currency interventions, through, perhaps, a tougher fight against speculations, through some other mechanisms. Because for the Central Bank, probably, the rate now is essential, because it affects inflationary expectations: not only the key stake, but also, of course, the exchange rate," the expert stressed.