How to tether ruble. Why the Russian currency grows when oil is cheaper

© RIA Novosti / Vladimir Traveloperator photobacteria in rubles and us dollarsHow to tether ruble. Why the Russian currency grows when oil is cheaper© RIA Novosti / Vladimir Traveloperator the image Bank

Last week marked a phenomenal event on the domestic market: the ruble significantly strengthened against the dollar amid a sharp drop in oil prices. Why the Russian currency was not bound to the quotations of «black gold» and what will happen with the ruble — in the material RIA Novosti.

How to tether ruble

Earlier in the week, global oil prices have experienced a real collapse: November 13, quotes fell from 69,68 64,61 up to a dollar per barrel. However, despite the long tradition, the Russian currency fell after oil, and significantly strengthened the exchange rate of the dollar decreased from 68.28 ruble on Monday to 65.86 USD on Thursday.

Short breaks of the ruble from oil happened before. For example, in November 2015 «black gold» has lost in the price of ten percent, and the Russian currency fell by only two percent. Experts in eager rivalry started talking that the ruble rid of oil. But soon a traditional relationship was restored.

Another failure of correlation noted in July 2016, when amid a sharp fall in oil prices — up to five percent for the day, the ruble exchange rate remained stable.

In March of this year about the disconnection between oil prices and the currency market announced officially by the Bank of Russia Elvira Nabiullina said that the dependence of the Russian economy and the ruble from oil prices «fell ten times.»

«In 2015 — 2016, the elasticity coefficient of exchange rate to oil quotations was close to unity, that is, the fluctuations of the ruble almost one hundred percent of the repeating movement of prices of «black gold», she explained. — Now, according to the calculations of the Central Bank, this indicator is only 0.1″.

Simply put, the growth (or decline) in oil prices by 10 percent should cause a strengthening (or weakening) of rouble by one percent. But now we see something else: the ruble and oil prices moved in opposite phase.

Speculators fled

The first reason is non-standard behavior of the ruble, oddly enough, the threat of tough anti-Russian sanctions. The fact is that since August, when it became known about the preparation in the us Congress two bills concerning restrictive measures against Moscow, speculators avoided the Russian market party. Therefore, to shake the currency market on news of falling oil prices, simply no.

«It is obvious that against the ruble today there are no major speculative game» — says a leading analyst Amarkets Artem Deev.

In the absence of speculators are the main factors for Forex traders — economic indicators. And with that in Russia everything is in order, because the Federal budget for the current year drawn up based on the cost of oil at $ 40 per barrel.

The collapse of quotations of up to 65 dollars per barrel and even below, will not affect the stability of the Russian economy. Therefore, no flight of investors from ruble has not happened.

Sanctions will not

The second reason is the fact that the sanctions act will not be adopted until at least the end of the year. This was announced on Tuesday, Senator Bob Menendez, one of the authors of the document.

According to him, Congress is no more time to impose sanctions this year because the U.S. parliamentarians in the coming months to focus on more important issues: government spending, appointing judges, the farm bill and others.

Indefinitely postponed and the introduction of a second round of sanctions «for poisoning Skrypalia». The first package of restrictions, which entered into force on August 6, banned the sale of arms and dual-use technologies, as well as loans from US government institutions.

The second may affect lending by international institutions (world Bank and IMF) to suspend the flights of «Aeroflot» in the USA and almost total cessation of trade between the two countries.

Donald trump has the right to choose what kind of sanctions from this list to enter in action. Moreover, he can do them not to enter or to withdraw at any time if it considers that these restrictions harm US interests.

Apparently, the White house is going to pull the issue of new sanctions «on the brakes». In any case, the state Department announced the beginning of «consultations with Congress on the next action», stressing that the law does not impose any specific deadline for decision-making.

And since Congress has already decided on the main areas of work for the coming months, new sanctions, if followed, not soon, and likely to be purely symbolic. For example, the ban on loans from the IMF and the world Bank that will not produce any effect, because Moscow has for many years not need such loans.

These considerations have attracted new investors to the Russian market. Experts note the emergence of large sellers of currency, which inflated the supply of dollars to a maximum of two years.

By the beginning of the evening session on Thursday, volume registered by the Moscow exchange orders for selling dollars has reached 400 thousand lots of one thousand dollars each — a record from January 2017.

The rubles received from the sale of the currency, investors are investing in Russian government bonds with very attractive yields amid falling geopolitical risks.

The fourteenth of November, the Ministry of Finance for the first time in four weeks placed the Federal loan bonds in full (five billion rubles), and the demand exceeded supply more than threefold.

The course of justice

According to experts, the Russian assets now seem unreasonably cheap, so the demand for them will grow at least until the end of the year. This is a good incentive for the further strengthening of the ruble.

«The current underestimation of the Russian currency due primarily to two factors: a General weakness of the currencies of developing countries in the last seven months and the sanctions in history, says senior analyst PSB Michael Poddubsky. — If the whole group of these currencies until the end of the year will show a marked recovery, the ruble against the dollar will return to relatively fair levels».

According to estimates Podolskogo, at current oil prices and lack of foreign currency purchases by the Ministry of Finance the fair exchange rate is around 63 rubles per dollar.