Page 84 - RusRPTJun21

7.0 FX
The ruble became stronger against the US dollar by the middle of May
than it was before the United States introduced new sanctions on Russia in April. Last month, US President Joe Biden signed a decree which imposed another round of sanctions on Russia, RT reported. Additionally to the sanctions that were introduced on individuals and organizations, and Russian diplomats, Washington also targeted the Russian debt market, expanding on its previous measures. With its latest sanctions, the White House decided to prohibit American financial institutions from participating in the primary market for ruble or non-ruble denominated government bonds issued after June 14. After these restrictions were confirmed, the Russian currency sank again against its previous closing level – however, it did not fall lower than before, and even managed to reverse some of its previous losses. It trades to around 74 per dollar – the same level it was in mid-March, before the latest sanctions were introduced – down from 77.7 at the height of the Russian forces on the Ukraine border incident.
The ruble is falling against the dual-currency basket amid a more noticeable weakening against the dollar in the middle of May, the demand for which increased after the release of data on consumer inflation in the US, which turned out to be much higher than forecasted. The US dollar exchange rate amounted to 74.46 rubles / $1 at 19:00, which is 35.25 kopecks higher than the level of the previous trading closing. The euro cost 89.91 rubles / EUR1, having fallen in price by 13.5 kopecks. The value of the dual-currency basket ($ 0.55 and EUR0.45) increased by 13.3 kopecks – up to 81.41 rubles.
The ruble’s 1.1% decline over the last 12 months is the fourth-worst in the developing world and bucks a 9.5% advance in MSCI Inc.’s emerging-market currency index.
That looks set to change as economies recover from the Pandemic.
“A number of tailwinds appear to be coming together for the currency,” Goldman strategists including Zach Pandl and Kamakshya Trivedi wrote in a note, highlighting a three-month forecast of the ruble rallying to 71 per dollar.
By the first quarter of 2022, the currency will probably jump to 70.1 per dollar, according to the median estimate of more than a dozen analysts surveyed by Bloomberg. While long ruble positions fell in the week ending April 27, leveraged funds trimmed their bearish bets, CFTC data show.
Deutsche Bank AG’s latest emerging-market scorecard highlights the potential. The ruble ranks sixth out of 22 potential currencies to go long, yet it scored far better on longer-term variables such as valuation, growth momentum and flows than short-term metrics.
84 RUSSIA Country Report June 2021 www.intellinews.com