The ruble strengthened by 0.9% on Friday 15 March and reached 64.83 per dollar. This is the best value since August 8, 2018, when the Russian currency sharply depreciated in response to the sanctions imposed against Russia.
This behavior of the ruble surprised many experts and market observers, because it was not accompanied by a rapid rise in oil prices (they even fell on Friday) or a rapid weakening of the us currency in the foreign market.
OccasionSpeaking about the reasons for this exchange rate movement, we should first mention the reason. The reason, in our opinion, is not surprising again was the news of the imposition of sanctions. If on August 8, us restrictions on Russia were due to the guilt in the poisoning of Skripal, today the US, EU and Canada argued sanctions aggressive actions of Russia in the Black sea and the Kerch Strait, as well as the annexation of Crimea.
It turns out that the market for several months was afraid of the introduction of new painful restrictive measures against the banking system, the purchase of new government bond issues and even rumors of disconnection from SWIFT, and received sanctions against 15 enterprises of the defense industry and 114 individuals, including Igor Sechin. For the head of Rosneft, this is certainly an unpleasant event, although, to some extent, even an honorable one. For the market, this was a signal that the trouble was not as big as expected.
ReasonNow about the reasons for the growth of the Russian currency on Friday. They're purely technical. In today's night review, our analysts pointed out that the USDRUB rate is between two key levels: support around 65.15 and resistance around 65.60. Breaking through one or another border will lead to a noticeable change in the course. Of course, we did not know about the sanctions, but it was clear that, having a reason to leave the established corridor, the course will react to the active development of the movement.
Further, as a ring on the rod can be strung a number of small factors that together led to the observed result: the evening of the last trading day of the week, the liquidity of the market below the average, stop orders for sale below the key support, which in March after three attacks remained intact, etc.
Looking objectively, the growth of the ruble is not surprising, although formed by many analysts the picture of perception of the prospects of the exchange rate, rather set up to see the weakening of the Russian currency. However:
oil prices this week rallied to fresh 4-month high;the passion around the parliamentary vote on Brexit in the UK ended very good for the developing market a chance for an agreement on the country's exit from the EU;The Ministry of Finance this week placed OFZ at a record 91.5 billion rubles, reflecting the high demand for assets,this week, the CBR reported that Russia's trade surplus in the period January—February increased by 1.3% to $29.5 billion.,and ahead of the March tax period.So why not the ruble and adjust its position in the direction of strengthening? Needed an excuse. And the market got it.
What the future holdsWe will not be surprised if in the next 2 weeks the ruble will further improve its position, although USDRUB below 64.00 looks quite unlikely event. But we do not expect that the strengthening of the Russian currency will turn into a stable trend. The fact is that oil has risen in price, and the Bank of Russia has a deferred demand, due to the fact that from August to mid-January, the regulator did not buy currency on the market. Therefore, the Central Bank can take advantage of the strengthening of the ruble and increase the scale of daily purchases of currency under the budget rule. This is an effective measure that can take away the potential for growth from the Russian currency. Michael Shulgin