Exchange vacuum cleaner: what will happen to the ruble after the intervention of the Ministry of Finance

© RIA Novosti / Natalia to Seliverstova in fotomonster Finance of the Russian FederationExchange vacuum cleaner: what will happen to the ruble after the intervention of the Ministry of Finance© RIA Novosti / Natalia to Seliverstova the image Bank

In the beginning of 2018, the Ministry of Finance will purchase a record amount of foreign currency. It will go additional oil and gas incomes of the budget formed because of the growing prices for raw materials. Why the need for FX interventions and how they will affect the exchange rate in the material RIA Novosti.

Oil in exchange for dollars

This year’s first foreign exchange intervention by the Ministry of Finance will hold from 15 January to 6 February. It stands out 257 billion rubles. Every day, more than 15 billion will be spent on dollars, euros and pounds sterling (at a ratio of 45, 45 and 10 percent, respectively). Purchased currency will replenish state reserves.

The Minister of Finance Anton Siluanov promised in 2018 to increase three to four times the purchase of foreign currency on the domestic market and, it seems, keeps his word. The Minister said that if oil prices remain at above $ 60 per barrel, then the intervention of his Department will spend 2.8 trillion rubles. In 2017, the Ministry of Finance purchased foreign currency only to 829 billion rubles in oil and gas revenues.

Foreign exchange intervention to smooth the negative impact of fluctuations in oil prices on the economy and budget system, and help to stabilize the ruble exchange rate. It is clear that it is not only about buying, but about selling the currency. Under the current budget, if a barrel of oil costs more than $ 40, the Ministry of Finance of currency to buy, if cheaper sells.

The bull

Oil prices are rising, and the Ministry of Finance increases the volume of currency interventions. For six months, the average price of Russian Urals increased from 45.7 to 63.6 per barrel. That is almost 40 percent. According to the latest St. Petersburg international commodity exchange, the March futures on Urals give 66,7 USD per barrel.

Reference Brent, to which the Urals crude oil has traditionally traded at a discount, is worth almost $ 70 a year all started with a record mark of 68 dollars per barrel has been broken for the first time since 2015.

One of the key factors supporting the growth of quotations, transaction OPEC+, designed to reduce the excess supply in the commodities market. However, the current record can be explained by speculative factor, the analyst of «Finam» Sergey Drozdov.

In his opinion, the main driver of growth now that the end of the year, easing pushed prices higher technical level of 65,8 USD per barrel. To mitigate the effects of fluctuations in prices, speculative or fundamentally justified, the intended intervention.

Deterrent

One of the goals of such actions of the Ministry of Finance is maintaining stability on the Russian foreign exchange market. Analyst «Discovery broker» Andrei Kochetkov says that now it is necessary to prevent excessive strengthening of the ruble.

According to him, no currency intervention, the dollar could fall to 52-54 rubles, which would lead to a reduction of the Federal budget revenues from the export of oil and other commodities.

Moreover, the potential for the strengthening of the ruble is maintained at a high level — against the backdrop of the highest in the last three years prices of oil.

However, the increase in the volume of purchases of foreign currency by the Ministry of Finance will not prevent the ruble strengthened, said the head of sales Treasury products the absolute-Bank Vladimir Borisov.

According to his forecast, by the end of January the dollar will fall to 56 rubles and below. «The correlation with oil prices weakening, so the ruble looks slightly undervalued relative to the cost of a barrel», — concluded the interlocutor of RIA Novosti.

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