Page 19 - RusRPTJun21

The ruble was trading at about RUB68 to the dollar at the start of 2019 and strengthen through out the year as Russia economy began to grow strongly. It begin 2020 at RUB61.8 and it seemed the trend would continue until March that year when Russia pulled out of the OPEC+ oil production cut deal and the bottom fell out of oil prices. The ruble crashed to around RUB80 but staged a recovery soon after. However, the rest of the year the exchange rate was hostage to speeches, “killer” comments and troop movements.
Now the Biden-Putin summit is on, slated fro July 16 in Geneva those geopolitical tensions are fading away and analysts are expecting the currency dynamics to go back to being driven by more usual things, like economics.
At the time of writing oil was just about to breach the $70 mark where it hasn't been since October 2018 and the ruble had strengthened from its Ukraine troops crisis low of Rub77.7 to its strongest al year of RUB73.45, its strong since August last year.
The outlooks for the ruble have been swinging about as violently as the size of the crises Russia has gone through recently, but almost everyone now agrees that the ruble will continue to strengthen from here. VTB Capital forecast RUB74.5 by the end of the second quarter and RUB73.3 by Christmas – a level the ruble had already reached in May, but the economist believe the currency will weaken in the summer months. Renaissance Capital has forecast a wider band of RUB69 (if the summit goes well) and RUB74 (if it goes badly).
The ruble has become more exposed to the ebb and flow of funds in and out of the country after the current account surplus fell in the last year to close to zero. With less money in the bank factors like capital flight and dividend payments have a bigger impact on the exchange rate than in pervious years.
But now the recovery is underway and oil prices are rising the current account surplus is growing again and that is adding strength to the ruble.
“According to a preliminary estimate of the Bank of Russia, in January-April 2021, the current account surplus of the balance of payments remained at the level of the corresponding indicator for 2020 and amounted to $28.1bn,” the Central Bank of Russia (CBR) said in its latest bulletin.
On top of that gross international reserves (GIR) increased by $9.5bn in the same period taking the total to $590bn, its highest level in years.
19 RUSSIA Country Report June 2021 www.intellinews.com