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| Currency surge. Why the ruble is strengthening and how long it will last |
| 2025-02-22 |
| Direct Translation via Google Translate. Edited. by Mikhail Zakharov [REGNUM] The ruble continues to strengthen. On Friday, February 21, the Bank of Russia set the official dollar exchange rate at ₽88.51 — for the first time since September 2024, the American currency fell below 90 rubles. At the same time, in over-the-counter trading on Thursday, February 20, the dollar sank below 88 rubles. The euro also showed a new minimum since August last year — the Central Bank set it at ₽92.48. At the end of December, the rate was more than ₽100 per dollar. Since the beginning of the year, the Russian national currency has grown by 13% against the dollar and has become the most successful in emerging markets. Not only the ruble, but also the Moscow Exchange index is doing well: on February 20, it rose above 3,300 points for the first time since the end of May last year. Since the beginning of 2025, the index has also shown good dynamics - at the beginning of January, it was balancing between the 2,800 and 2,900 points marks. It is obvious that big politics played a role in strengthening the Russian currency. First of all, we are talking about the telephone conversation between the presidents of Russia and the USA, Vladimir Putin and Donald Trump, as well as the negotiations of the delegations of the two countries in Saudi Arabia - their results were highly appreciated in both Moscow and Washington. However, there are also other, purely economic reasons, notes Alexander Losev, CEO of Sputnik Capital Management, in an interview with IA Regnum. According to him, the rouble is being helped by the stabilisation of liquidity – the fact that exporters have been given the opportunity to conduct transactions with currency, including yuan, as well as the approaching tax week. During this period, Losev explains, exporters will convert foreign currency earnings into rubles to pay taxes to the Russian budget, which supports the value of the national currency. Simply put, there is more currency in the country, so it becomes cheaper. In addition, the source of IA Regnum adds that the ruble has been undervalued recently, considering that Russia has a positive balance of both trade and payments. The strengthening of the ruble can help reduce inflation, as well as reduce the cost of servicing foreign debt and prices of imported goods. Consumers may have already noticed the latter: for example, the cost of the iPhone 15 (iPhones are often used when monitoring prices for equipment) in Russia has fallen to a record low due to the dollar exchange rate - the base model costs an average of 60 thousand rubles, although before the new year the smartphone cost more than 70 thousand. According to Alexander Losev, the strengthening of the ruble is a positive factor for the country's economy. “Firstly, the disinflationary process is launched, and inflation is a very serious problem in the economy for us,” says the expert. “Secondly, the opportunity arises to purchase equipment for reindustrialization.” At the same time, the strengthening of the ruble threatens major losses for exporters, who are already facing problems due to sanctions restrictions, believes Nikolai Dudchenko, an analyst at the financial group Finam. MONEY AND SANCTIONS According to Alexander Losev's forecasts, the national currency will continue to strengthen as long as additional currency comes to the market. Much will also depend on the geopolitical situation, including whether sanctions against Russia are lifted (at least partially). As for the development of the situation on the Russian stock market, it is tied to geopolitics and the policy of the Central Bank. "The monetary policy (MP) is still very, very strict, the dividend yield of Russian stocks is lower than deposit rates," notes the interlocutor of the IA Regnum" Two conditions must come together: a softening of the MP by the Central Bank and an improvement in the geopolitical situation, so that the Russian stock market begins a trend growth." For now, anti-Russian restrictions remain in force. Moreover, the European Union has already approved the next, 16th package of anti-Russian sanctions. Of course, they will not have a fundamental impact on Russia’s foreign trade and the country’s economy, but they remain a visible reminder: the West has not yet lifted restrictions – it is only introducing new ones. THERE IS NO NEED TO RUSH TO THE EXCHANGE OFFICE In any case, while the ruble remains strong, some Russians have already gone to exchange offices to buy cheaper dollars. And this is despite the fact that in some exchange offices the exchange rate is significantly higher than the official one. Such actions do not make financial sense, notes Igor Balynin, associate professor at the Financial University under the Government of the Russian Federation, in a conversation with IA Regnum. Exchange rates, he explains, are extremely dynamic, and it is extremely difficult to make money on them, especially if we are talking about a toxic currency, which the dollar has now become. Moreover, says Balynin, small fluctuations in currencies cannot even become a factor in potential earnings: banks have a spread (fixed difference) between the rates of sale and purchase of foreign currency, as well as commissions for making exchange transactions. "Accordingly, even deviations of 10-20% will not allow you to not only earn, but even break even. Now it is best to put your available funds into bank deposits," the agency's interlocutor advises. He also shared his own calculations with Regnum News Agency : Russians who invested in dollars in November 2024 have already lost more than 170 thousand rubles (based on the average bank deposit size), with more than 138 thousand rubles of that being losses on exchange rate differences, and the rest being lost income for 3 months (if in November the money had been placed on a deposit/savings account instead of buying dollars). “I think, looking at this data, it becomes clear why you shouldn’t run to the exchange offices,” says Balynin. |
| Posted by:badanov |