Ruble falls sharply after holidays

Ruble falls sharply after holidays

The ruble, which had been steadily increasing, dropped during today's trading on the Moscow stock exchange that resumed after a break for May holidays.

As of 22:15, the dollar costs 66.6 rubles, rising by 1.97 rubles.

In turn, the euro rose by 2.52 rubles, to 76.54 rubles.

At the same time, at some point the US and the EU currencies reached 66.8 and 76.7 rubles respectively.

In an interview with Vestnik Kavkaza, an Associate Professor of "Stock Markets and Financial Engineering" Department of RANHiGS Vasily Yakimkin stated that he sees nothing unusual in this. "It is a normal market reaction to the dynamics of oil. In other words, the price of oil drops a little, within its monthly volatility, and the ruble reacts to this accordingly. Right now it has no serious support, tax payments ended in the end of April, when the ruble in high demand. Moreover, the dividends will be paid in May, and the people, just like foreign investors, will be converting them into foreign currency. So there is a local demand for foreign currency. And as a result, the ruble is under slight pressure," he explained, noting that "all of this is within monthly volatility, and there is no need to panic."

"There are also rumors that at July session of the Bank of Russia we will reduce the key rate, maybe even at June session. But I think it will happen in July. The key rate will be lowered by about 50 basis points. This is a consensus forecast that experts give, and it will also put pressure on the ruble. Traders already begin to play with the ruble in anticipation of this event," the expert added.

An Associate Professor of the "Finance, Money Circulation and Credit" Department of RANHiGS Yuri Yudenkov is more pessimistic about the near future of the ruble. "I think that the drop will continue. Perhaps now the Central Bank will make some efforts, but the gradual drop of the ruble will continue, except if something happens to oil," he expects.

"Some of my colleagues believe that this is purely speculation on the stock exchange, that it is not a real price of ruble/dollar. This point of view probably prevails. Taking into account the oil prices fluctuations, it actually turns out that speculators are indeed trying to do something on the stock exchange. But I believe that despite the fact that our production is somewhat getting better, we still buy a number of high-tech products abroad. And if you look at the balance of payments of our country, you will see that right now it is still positive, but at the same time starts to feel the pressure already," the expert explained his opinion.

"My prediction is that by August, the dollar will probably be around 75. This is my alarmist point of view, not all of my colleagues agree with it," he concluded.