Ruble falls to half-year low
This morning the dollar increased by 0.75 rubles and was worth 65.03 rubles, the euro rose 1.02 rubles and was worth 72.07 rubles at the Moscow Exchange. The euro rose above 72 rubles for the first time since February 24, and the dollar rose above 65 rubles for the first time since 13 February.
The fall of the ruble against the dollar and the euro is due to a decrease in oil prices and volatility in global currency markets, caused by the devaluation of the yuan. After the record devaluation, the yuan fell by 1.8% yesterday, and today by 1.6% to 6.4264 per $1, Korrespondent.net reports.
On August 6 the euro exceeded 70 rubles at the Moscow Stock Exchange for the first time since March. Shortly before, the dollar crossed the mark of 64 rubles for the first time since late February. Experts predict that the link between oil prices and the ruble exchange rate will continue to prevail over other factors. Investors remain concerned about the growth of oil production in the OPEC countries and the devaluation of the yuan.
The professor of the RANEPA Chair of Finances, Money Circulation and Credit, Yuri Yudenkov, told Vestnik Kavkaza that the vague policy of the Central Bank is the main reason for the fall of the national currency. "It announced that it will increase the foreign exchange reserves. Of course, the rate will go up. This is the first thing. Secondly, you know that oil prices are falling. We also know that in six months Iran will start full supply to the market. And thirdly, the production of shale oil in the US is not reducing," the expert said.
"There is a world crisis, production in developing countries and in Europe is suspended, so we have a decline in consumption. The price of oil is falling, and that is the one of the most important factors of obtaining currency in our country. And the third factor is the payment by our corporations of external debt in foreign currency. And the most insulting thing, the fourth one, is that our own production is not growing," Yuri Yudenkov stressed.
He also said that the devaluation of the yuan has not affected the ruble. "Our cross-border trade with China is in yuan and rubles, but it is small amounts."
As to the bottom of the fall of the ruble, the professor of the RANEPA Chair of Finances, Money Circulation and Credit said that in such circumstances it may reach 100-120 rubles per dollar.
"It's getting only worse. I do not see any economic restrictions on currency collapse, besides production, which uses imported components, which will begin to stop it," Yuri Yudenkov concluded.
The chairman of the National Foreign Exchange organization, Dmitry Piskulov, in his turn, said that the ruble continues to decline due to a whole combination of factors. "First, the most important of these is the declining price of oil," the expert stressed.
"Secondly, China had the largest devaluation in the past 20 years, showing that it is one of the solutions for the country's economy, which is also experiencing a decline in growth. They are still working on an export-oriented model, for which the most important thing is to grow exports, and the depreciation of the yuan against foreign currencies is one of the most effective ways to raise exports," Dmitry Piskulov explained.
"In addition, we see a worsening of the geopolitical situation in Ukraine. For a number of participants it is a factor that puts pressure on them, forcing them to buy the currency. We have a negative forecast for the development of the Russian economy. This negative macroeconomic factor, coupled with low inflation, means that business activity is low, consumer demand is reducing. The dollar is strengthening against foreign currencies because of China's decision. So we can see 67-68 rubles per dollar," the chairman of the National Foreign Exchange organization suggested.