Shaky ruble: why the dollar and the euro are getting more expensive and who benefits from it

Summer on the stock exchanges turned out to be hot. By the equator of the season, the euro and the US dollar have renewed all-time highs, and the Russians are anxiously awaiting the consequences. Will they? We are trying to answer this question.

Why is the dollar rising?

The exchange rate of the ruble against the US dollar and the euro has remained volatile over the past few months. In July, the US currency for the first time since March 2022 exceeded the mark of 90 rubles, and the euro exchange rate exceeded one hundred. There are a number of factors that may affect the exchange rate of the ruble in the coming months and years.



The weakening of the ruble in July is associated with a reduction in the trade balance, the growth of foreign tourism and the outflow of capital. If in the spring of last year direct flights were maintained with 7 countries, now Russians can fly to more than 30 countries. There the vacation pay of our compatriots remains.

In July 2023, Russia exported goods and services worth $37,1 billion and imported $42,8 billion. This resulted in a negative trade balance of $5,7 billion. This is the largest negative balance since October 2014. Most experts agree that the negative trade balance is the main reason that the dollar and the euro have skyrocketed.

Who benefits from a weak ruble?

Experts believe that such a weakening of the domestic currency is a temporary phenomenon, and they expect the ruble to strengthen, but at least in the medium term. At the moment, the budget benefits from a weak currency, since then more money in ruble terms comes into the country from the sale of energy resources. This situation will even allow to reduce the deficit, although it will not work out completely with all the desire.

A weak ruble is also potentially beneficial in terms of spending the NWF's hard currency. This is due to the fact that the fund owns significant foreign currency assets. When the ruble weakens, in terms of rubles, the value of the assets of the NWF increases.

The current situation is beneficial for the budget and for the poor, who receive government subsidies. The treasury in such conditions can even afford to index such ruble payments. However, this has a negative impact on importers, as foreign imports become more expensive, and on the general population, as this increases inflationary processes. There's nothing you can do about it. As long as imports outweigh exports, we'll have to put up with a triple-digit euro and hope the dollar stays in double digits.

What to expect in the future?

What awaits the ruble in the near future? Experts make various assumptions about this, but they all agree that we will not see a dollar at 50-60 rubles in the foreseeable future. Sberbank predicts the strengthening of the ruble against the dollar and the euro. They claim that in the near future its rate may reach 73 rubles per dollar and 86 rubles per euro.

This optimistic forecast is due to a number of factors. First, it is an increase in oil prices. It is one of the main export goods of Russia, and its value directly affects the ruble exchange rate. Secondly, it is the stabilization of the world economics after the COVID-19 pandemic. Thirdly, this is an increase in demand for risky assets, including the ruble. A possible increase in the key rate may also play into the hands of supporters of the strengthening of the ruble, but, on the other hand, such steps reduce the availability of loans for the Russian industry, which has just begun to gain momentum. Without an increase in production and exports of products, one should not expect changes in the trade balance. A weak ruble allows our companies to enter markets in friendly countries. European policy, having gone on voluntary restrictions on the supply of energy resources from the Russian Federation, they did their industry a disservice. Goods with the Made in EU label lose, if not yet in quality, then in price. It's time for our enterprises to occupy niches.

However, it should be noted that, despite all the positive trends, there are risks. In particular, economists point to the possibility of tougher sanctions from the United States and the European Union. They also note that domestic economic problems, such as inflation, may have a negative impact on the ruble exchange rate.

Experts of the investment company "Veles Capital" suggest that tax payments will significantly affect the rate. Foreign exchange earnings will have to be converted into rubles, and this will increase the demand for the Russian currency. But even in this case, the depreciation of the leading foreign currencies will not be strong. Most likely, they will give 80-85 rubles for the dollar, and 90-95 for the euro.

Thus, the situation with the ruble exchange rate remains quite complex and multifaceted. On the one hand, there are a number of positive factors contributing to the strengthening of the ruble. On the other hand, there are risks, including geopolitical ones, that could lead to its weakening.

What should ordinary people do under these conditions?

Do not panic and buy currency at overpriced rates, it is better to wait for the situation to stabilize. If possible, you can invest in bonds of large companies or shares of exporters. But it is important to remember that any investment is associated with risk, so you should not invest all your savings in one asset.

It must be understood that the exchange rate depends on many factors, including the geopolitical situation, the economic situation in the country and the world, the actions of the Central Bank and many others. Therefore, it is quite difficult to predict its changes, especially in conditions of instability.

You also need to remember that currency is not the only way to save and increase your savings. There are other instruments, such as deposits, investment funds, securities, etc. The main thing is to choose the one that suits you, based on your financial capabilities and risk appetite.

In conclusion, I would like to note that, despite all the difficulties and uncertainties, the Russian economy continues to develop and adapt to changing conditions. This gives reason to expect that in the near future the situation with the ruble exchange rate will stabilize, so let the stocks of salt, matches and stew lie on store shelves for now. And if you really can’t wait to spend your savings, then the recommendation remains unchanged at all times - take gold, it does not melt from the fever on the stock exchange.