According to Russia’s central bank, the real effective exchange rate of the Russian Ruble increased by 2,5% in April 2017 against March 2017. What is the long-term forecast and what are the chances of a weaker ruble in the near future? Market Leader will try to figure this out together with several experts.
According to financial and market analyst Stepan Demura at Rosbalt, chances are the market is going to stand still over the next 2-3 months. However, he expects the Russian ruble to crash all the way down to 97 RUB for 1USD later this year. Yet, his says this is going to be just the beginning. Later on, the Russian Ruble is likely to crash down to 125. By 2019, we may well see even 500RUB per 1USD. If that’s the case, this is going to be a nightmare for the Russian economy and financial system. Against such forecasts the forecasts mentioning 70RUB per 1USD are not that scary anymore.
Fundamentally, this is just a recovery, which is likely to be followed by a strong global recession. The expert says that it’s going to be way stronger than the one seen in 2007-2008. With that being said, international stock indexes yet have the last tiny rally before crashing. This rally may take 3 to 5 months. This is expected to be followed by the strongest crash in the entire history of financial markets, with all the related consequences for the world, including Russia and its national currency. Still, the expert tries to stay optimistic. He says that those who think this is bad news for the world is ignorant when it comes to economics and finances. Savvy investors will definitely catch at the chances and make tons of money on this crisis.
According to Vadim Zhartun, an expert from Nova Team, says that making short-term forecasts for the Russian Ruble is amateurish. It’s like gambling and playing guessing games. There are several factors influencing the situation, including the OPEC summit in Vienna. The results will drive oil prices. Oil prices will drive the Russian Ruble since the Russian economy is heavily dependent on the export of crude oil.
He says that even the central bank and the Russian Ministry of Finance don’t know what’s coming next. That’s why they want to put their financial reserves on hold. Theoretically, they could implement big-scale currency interventions for 3 to 6 months to influence the Russian Ruble exchange rate. Still, this is too risky since this can be too costly. On top of that, if the exchange rate changes rapidly, foreign market players may start reducing their exposure only to escalate the situation. And it’s difficult to say how serious the market panic may be in this very case.
Andrei Movchan also thinks that devaluing the Russian Ruble artificially isn’t something we should expect in the near future. The central banks simply cannot afford this.
Lev Savulkin underlines that even if the government and financial authorities would like to devalue the national currency, this isn’t something they can afford at all times. Even while devaluing the national currency may help the government fulfil their budget obligations, still certain conditions are needed, and those conditions rely on key export prices like natural gas and oil for Russia. If gas and oil prices go down, the Russian Rubble will follow.
