Currency crisis: what will happen to the ruble after the attack on Syria

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Валютный кризис: что будет с рублем после атаки на Сирию

The ruble began to slowly win back losses he experienced after the introduction of U.S. sanctions against the Russian companies and businessmen. Also started growth and in equity markets. However, experts of the “Free press” sold in the projections of macroeconomic situation in Russia.

The dollar and the Euro increased by 10%

The state Treasury, the U.S. imposed sanctions against Russian officials, businessmen and companies last Friday, April 6. The basis for a new portion of economic sanctions was “malicious activity” (malign activity) of Russian support for the separatists in Ukraine and the regime of Bashar al-Assad’s cyberwar against the West…

However, the strong reaction to the introduction of a new portion of sanctions followed only on Monday. Additional pressure on the stock and currency markets have had a worsening of the situation around Syria, in which Donald trump has promised to strike, and then struck a military strike over alleged chemical attack in the Damascus suburbs (in the opinion of the West, for it allegedly was the Syrian government).

And it’s Monday already started with the actual collapse of quotations on the largest stock exchanges of Russia: MVD index fell nearly 9% and the RTS index by 13%. Fever after beginning of currency markets: the Euro from Monday to Thursday surged 7.4 rubles (by 10.2%), and the dollar — by 5.5 rubles (9.5%).

The Euro pierced the psychological mark of 79 rubles (this was not from February 2016), and the dollar rose above the 64 percent for November 2016. The ruble has experienced a sharp weakening in relation to all other currencies.

In the shops of home and mobile electronics again appeared half-forgotten queues, people decided to invest their savings in televisions and smartphones. While not expensive. But if on Wednesday we saw modest growth in the stock markets of Russia, on Thursday began to grow and the ruble. In particular, the official Euro exchange rate set by the Central Bank on Friday, fell by 2.53 ruble, and the dollar by 2 rubles.

The nurse is more important than the Central Bank?

With the soothing statements were made, and officials. In particular, the head of the Central Bank Elvira Nabiullina at the plenary session of the “Exchange forum — 2018” stated that no risks to macroeconomic stability sees.

“The Central Bank has a wide range of tools in order to act in different situations, if there are risks to financial stability… In our opinion, now there is no such risk, there is no need to apply any systematic measures,” — said Nabiullina.

Echoed her and the Deputy Chairman of Vnesheconombank Andrei Klepach: at the Krasnoyarsk economic forum, he said that the exchange rate will soon return to the marks below 60 rubles per dollar.

The strengthening of the ruble, however, is not by any running state mechanisms — but only for the reason that softened the rhetoric of the US authorities. The head of the State Treasury Steven Mnuchin said that the us authorities do not consider the possibility of imposing sanctions against the national debt of Russia.

On this occasion, the economist Mikhail Delyagin even said ironically, they say, the ruble is now determines it is not the Russian Central Bank, and the black nurse giving the President of the United States in the morning sedative.

It seems that now the soothing forecasts is irrelevant. Trump didn’t give the right medicine.

The national debt will “fill in” the empty issue

— In addition to sanctions, the ruble presses very insecure situation in Russia itself, where as it shows “the case Magomedov”, may come even to those who yesterday were considered close to the authorities. This stimulates the export of capital, — says a senior researcher of the Institute for economic policy Sergey Zhavoronkov. — At the end of 2017, the net capital outflow is not reduced, but increased — from $15 to $31 billion.

Note Suleiman Kerimov being released from house arrest in family court in Russia, he chose to return to France and prove his innocence in a French court, although he could not do that. With all the problems of the Western legal system, it is difficult suddenly to take it away.

And finally. Now the national welfare Fund (NWF) there are about 3.7 trillion. rubles. For three years the Russian authorities have spent more than $ 6 trillion. of stabilization funds. The planned budget deficit of 2018-2020 exceeds 8 trillion. rubles, NWF plus planned borrowing 1.8 trillion. rubles leave a significant “hole”.

And the market suspects that at some point it will “fill in” the blank emission, so as to reduce the cost of the Russian authorities basically do not want. And loans of 1.8 trillion. doubtful, in view of the further escalation of sanctions with the prospect of a ban on buying Russian debt.

“SP”: — What are your predictions on the ruble in the coming weeks?

— I am not a professional investor. But when you see that the budget is bursting (and I saw, for example, in mid-2013), then buy dollars and euros.

Can’t predict the peak, which is better to drop the cash in a short period. Conditional on 17-18 December 2014, when the dollar was 70 rubles. Over the past year cash Euro grew against the dollar by 7%, investments were profitable. I think that the medium for the currency to grow, and short-term peak will occur on the days on which falls the main fighting.

All forecasts depend on the sanctions

However, not all economists adhere to such negative assessments of the macroeconomic situation in Russia. Managing partner of the company “Financial and organizational consulting” (FC), Moses formic expressed this opinion:

— Excluding sanctions situation macroeconomic situation in Russia has been stable: the reason for a significant decline of the ruble was not, as for growth.

But the sanctions are fundamentally changing the business. First, there is the possibility of a significant reduction in exports, that is, the deterioration of the trade balance.

Secondly, it is highly probable a serious outflow of funds from the Russian financial market. As with the sale of shares and termination of foreign operations carry trade (the profit on the foreign exchange market due to different interest rate in different countries — Ed.).

Third, funds will be needed to finansirovaniya increasing the budget deficit. And for this you may need the “help” of the Central Bank.

“SP”: — But in the medium term, your predictions rather positive?

— Everything will depend on sanctions. Without them it would have been very stable, although not superpositive. But unfortunately, a high probability of further expansion of sanctions after attack on Syria and then the situation could quickly and visibly to deteriorate.

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