Experts predicted the ruble in August

© AFP 2018 / Alexander NemenovРублевая coin on the background of the Moscow Kremlin. Archival photoExperts predicted the ruble in August© AFP 2018 / Alexander Nemenov

Approaching August is unlikely to be a serious challenge for the ruble, according to respondents RIA Novosti analysts.

The pressure on the Russian currency may persist because of the risks of geopolitical flare-UPS, falling oil prices and a local shortage of dollars from the conversion of dividends into foreign currency and on the backdrop of monetary policy tightening in the US, but the dollar at least will not be able to grow above the 64 rubles, according to most experts.

August is the month of the test

August is traditionally seen as a difficult month for the ruble. Statistics over the past 20 years indicates that this month, the national currency showed a negative trend against the dollar in 70% of cases, said the analyst of «Nordea Bank» Denis Davydov.

«However, if the observation to exclude very dramatic and 1998, the average Russian currency during periods of recession, lost weight, only about 3% against the dollar. After the transition of the ruble «free floating» in the end of 2014, the decline of the Russian currency was observed only in August 2015. However, if oil prices amid risks of overproduction decreased to the levels close to 40 dollars per barrel of Brent crude», he added.

Almost always the collapses of the ruble began after the massive collapse in oil prices: it was in 1998 (but the collapse in oil prices has added more and Russia’s inability to service a huge debt), so it was in 2008, and in 2014-2015, says the Deputy Director of analytical Department of company «Alpari» Natalia Milchakova.

64 – ruble limit to the dollar in August?

The upcoming month is unlikely to become a crisis for the ruble, experts say.

«The volume of foreign debt payments in August – the lowest among the other months. According to the Bank, it is expected to reach 4.3 billion dollars, which is twice lower than in an average month this year. The trade surplus will likely remain at $ 15 billion. The activity of the Ministry of Finance in the foreign exchange market, apparently, will remain the same. Effect of purchases in the reserves for a course noticeable, but it is important that it will not grow», — said the head of operations on the Russian stock market IR «freedom Finance» George Vashchenko.

The price of oil fell sharply amid risks of trade wars that the US conducts with other countries, but remained above $ 70 per barrel Brent. Most likely, the quotations of «black gold» will remain in the range of 70-80 dollars, and the USD/RUB will remain in the range of 61-64 he added.

Until the end of August, the ruble is likely to remain in the range of 61 to 64 against the dollar, also believes the trader of Bank «GLOBEKS» Sergei Chetverikov.

The geopolitical factor of the exchange rate of the ruble is likely to come to naught, as us senators go on vacation, the State Duma also finished the session, says head of financial markets operations of Bank «East» Konstantin Kochergin. In August likely to preserve effective April range of course 62-64 rubles per dollar, appreciated it.

4 August the US Senate goes on vacation, and this means that the legislative initiatives of U.S. congressmen about the introduction of new sanctions against Russian companies could be considered in the relevant committees prior to September, also said the head of trading strategies Dukascopy Bank Daniil Egorov. Accordingly, geopolitical risks are limited, he said.

«Moreover, the beginning of the season Atlantic hurricanes can disrupt oil infrastructure in the southern United States, which in turn will lead to higher oil prices. Thus, according to our calculations, USD/RUB will fluctuate in the range 62-64», he said.

If we will not see tough new sanctions similar to those that were imposed against RUSAL, the dollar is likely to remain in the range 62,8-63.8 ruble, considers the Director of analytical Department IK «Region» Valery Weisberg.

At the moment the ruble is significantly undervalued relative to oil prices and macroeconomic indicators, said the chief analyst at Promsvyazbank Michael Poddubsky.

«However, the General weakness of the currencies of developing countries and the return relevance of the sanctions of history do not allow the ruble to mitigate this underestimation. We continue to focus on the range of 61 to 64 rubles per dollar, tending to the consolidation of the pair during August, mainly in the upper half of this range,» he said.

Problems may still arise

Despite the General optimism about the ruble, August is not the easiest month for the Russian currency.

Among the possible risk — reduction of balance of payments and the second phase of the dividend period when the conversion of ruble-denominated dividends in the currency, says Davydov.

Local pressure on the ruble may have to convert into foreign currency dividend payments received by the investors at the end of 2017, says Egorov.

«It maintains downward pressure on assets and emerging market currencies on the back of further tightening of monetary policies by major global financial regulators. There are concerns raised by the theme of trade wars» — also indicates Davydov.

An important negative trend is the impending shortage of dollar in the world on the background of toughening of monetary policy of the fed, says Chetverikov. «We are already seeing a steady growth of the American currency. That threatens not only the Russian market, but also the others. The escalation of the conflict between the US and China can go to a currency war. First and foremost, affected the currencies of developing countries,» he fears.

«Despite the fact that the next initiative of the American legislators to strengthen sanctions against Russia has little chance to be worked through before the summer recess of Congress, the fact of increasing the degree of tension on this issue will also limit the positive in respect of the ruble and ruble assets; finally, strengthening of correctional moods in the oil market creates additional challenges for the ruble,» — added Davydov.

The cause of the collapse of the ruble amid falling oil prices is clear – the budget receives less revenue from hydrocarbon exports, Russia is strongly dependent, and have not yet seen the end of this relationship, said Milchakova. «Any movement of oil down, for example, at $ 30 per barrel very quickly «eat» all of the accumulated salt away in Fund of national well-being,» she said.

In the negative case, the dollar in August, will not go above 65 rubles, however, and its reduction to 60 rubles is unlikely, appreciated it.

The balance of risks remains tilted in one direction to a modest weakening of the Russian currency, the ruble can finish August with unfavorable scenarios reduction in GDP to a level 64-64,5, loss this will fit in the «statistical» 3%, summed Davydov.

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