Russian Central Bank: ruble stabilizes
The volatility of the ruble has dropped significantly due to declining volatility of oil futures and returned to the level of the summer of 2014, the Bank of Russia reports.
The regulator also noted that this month the market participants expect a small increase in the volatility of the dollar against the ruble.
According to the Bank of Russia, last month the dollar has strengthened against the majority of world currencies. It was due to a significant increase in the expectations of the US Federal Reserve raising key rate after the favorable statistics on the US labor market and the statements of representatives of the US regulator about a possible tightening of monetary policy until the end of 2016, TASS reports.
As a consequence, the demand for foreign currency from non-residents has significantly increased on the Russian foreign exchange market.
This morning, the dollar exchange rate increased by 0.10 rubles to 65.82 rubles at the Moscow Exchange.
Professor of the RANEPA faculty of Finance, Money Circulation and Credit, Yuri Yudenkov, speaking to Vestnik Kavkaza, noted that such low volatility of the ruble has been caused by the Central Bank's policy. According to the expert, first of all, the current situation can be changed by the policy of the US Federal Reserve, which may decide to change the refinancing rate in December 2016 or January 2017. In addition, the ruble exchange rate volatility can be affected by the next OPEC meeting, which is scheduled for 30 November, as well as the policy of the new US president Donald Trump, whose inauguration will take place on January 20, 2017.
"OPEC has already expressed its position. As the price of resources will be the same at least in the near future, we should not expect any special surprises. If not in December, in January, the Federal Reserve will change the rate. Now it is 0.25-05%. Trump said that it will be raised by at least 1%. Therefore, the ruble exchange rate will increase, of course," Yuri Yudenkov concluded.
Advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, in turn, noted that, in his opinion, the main reason for such a low volatility of the ruble is an oil price stabilization. "It's no secret that Russia's budget is officially 43% filled with revenues from exports. Therefore, strong oil price changes provoke noticeable fluctuations in the ruble exchange rate. Now the oil market is sufficiently close to equilibrium, and as a consequence, we see quite a calm environment on the Russian foreign exchange market," the expert said.
However, the economist refrained from long-term forecasts regarding the duration of the current stability of the ruble exchange rate. Speaking about external factors of impact on the volatility of the ruble, Sergey Hestanov expressed doubt that the upcoming meeting of the OPEC member states will reach any real agreements.
According to the expert, the US Federal Reserve's decision to raise rates may have a more significant impact on the ruble. "However, for the Federal Reserve it will be very difficult to decide whether it should raise rates, as the US economy has become accustomed to low interest rates for these years. Therefore, on the one hand, the probability of raising a rate in December is small, but on the other hand, rising rates will reduce the value of all assets, respectively, after a decline in oil prices, we see and the weakening of the ruble," the advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house concluded.