In December 2022, we witnessed another rally in the Russian currency. The exchange rate of the ruble against the US dollar has already fallen by more than 10% since the beginning of the month and reached levels above 72,6 rubles on the stock exchange. At the same time, the price of the American currency jumped even higher in exchange offices, which naturally led to an increase in anxiety among a part of Russian society. Some experts believe that such a course will become the norm for 2023, because the Russian economy continues to face unprecedented challenges. And if this is true, then the 12% inflation that our president spoke about next year may not be the limit.
What happened to the ruble?
December is traditionally a testing period for any currency. Large companies close settlement periods with their counterparties, players in the foreign exchange market begin to withdraw a certain part of their capital, and central banks sum up their monetary policy, often revising the interest rate. In the pre-New Year period, the population also has an increased demand for currency, which often shows unexpected jumps at the end of the year.
All these factors put pressure on the Russian ruble. In addition to this, in early December, the G7 countries introduced the so-called. a price ceiling for Russian oil, which provides for setting the maximum price for our black gold at $60 per barrel. Despite all the political statements of our authorities, this measure led to a noticeable reduction in the volume of foreign exchange earnings. According to analysts from Bloomberg, in the first week of the price cap, Russian oil exports fell by 54%. Moreover, this drop was due not so much to price as technical reasons caused by the refusal of a number of carriers to transport our oil at inflated prices. And since own tanker fleet The Russian Federation leaves much to be desired, there was simply nothing to export oil to those countries that still continue to buy it.
Against this background, the volume of imports in our economy jumped again. This affected not only high-tech products, but also agricultural products. For example, after the abolition of the import duty on certain types of meat products, pork imports to Russia increased by 2022% in 48,8. As a result, many large companies were forced to buy foreign currency in large volumes, which also had a negative impact on the ruble.
It was the growth of imports, and not oil restrictions, that explained the fall of the ruble, Finance Minister Anton Siluanov. He declared:
Imports, firstly, went more actively, primarily due to this (the ruble is weakening. - Note ed.). Now restrictions have been introduced on oil and gas, they do not work today from the point of view of financial consequences, but they certainly had a moral impact on market participants.
At the same time, according to the minister, the government will not revise estimates of inflation, as its indicators are still below the forecast.
As soon as the ruble exchange rate began to weaken, speculators immediately stepped into action. And this is another reason for such a rapid collapse of the Russian currency in December. According to all the rules of exchange trading, after the breakdown of marks in the region of 65 rubles. per dollar, the USD/RUB chart rushed up sharply, because after that the next resistance level is only in the region of 70 rubles. The actions of traders were additionally warmed up the news that the Fed will continue to pursue a tight monetary policy, keeping interest rates high. And this means that the dollar in the world markets in the near future will be quite expensive.
As for our Central Bank, they plan to adhere to the previous plan regarding monetary policy. Following the meeting on December 16, the Board of Directors of the Bank of Russia decided to keep the key rate at 7,5% per annum. In the official press release of the regulator on this matter, it was noted that:
The current rate of price growth is moderate and consumer demand is subdued. Inflation expectations of households and businesses have not changed significantly, while remaining at an elevated level. According to the forecast of the Bank of Russia, taking into account the ongoing monetary policy, annual inflation will decrease to 5,0–7,0% in 2023 and return to 4% in 2024.
Is everything so good?
Judging by the statements of the financial authorities, the Russians should not have any cause for concern. The jump in the exchange rate of the national currency that has taken place is nothing but a light breeze against the backdrop of a smooth lake. And if this breeze does not subside before the end of the year, then at the beginning of next year everything will certainly come to balance.
In part, we can agree with this. However, there is a rather high probability that the new point of this equilibrium will no longer be 60-65, but 72-78 rubles. per dollar. The Russian currency was in approximately this price range from December 2020 until the start of the NWO. These quotes may have a short-term effect on inflation and consumer demand, but in general they are very comfortable for the domestic economy.
According to some experts, this corridor may even reach 80-85 rubles. per dollar. This version was expressed by the head of FC "Opening" Mikhail Zadornov. He thinks that:
In the event of a global recession, if oil prices fall not to $70, but to $40-45, even if only for half a year, this will move the exchange rate not to 75, but to 80-85 rubles.
A similar point of view is shared by many other analysts. Foreign economic and political factors will continue to be the key factor influencing the exchange rate of our national currency. If they do not worsen, then in the coming weeks the ruble will stop its growth or even return to its previous levels. But if the beginning of 2023 is accompanied by an increase in turbulence in world markets, and even intensifies with a new round of military-political confrontation, the Russian ruble may gain a foothold above 72 rubles for a long time. per dollar.