Page 67 - RusRPTDec20

7.0​ FX
RUSSIA -FX
2016
2017
2018
3Q18
4Q18
1Q19
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
Currency (units per EUR) (eop)
64.8
68.9
79.5
81.0
79.5
72.9
72.1
71.5
69.8
76.3
78.9
75.0
Currency (units per USD) (eop)
61.5
57.6
69.5
70.0
69.5
64.8
64.3
64.7
63.0
69.3
71.7
68.0
Currency (units per EUR) (average)
74.4
65.8
74.0
76.0
76.1
75.1
72.6
72.0
69.7
73.3
79.5
74.1
Currency (units per USD) (average)
67.2
58.4
62.7
65.5
66.7
66.1
64.6
64.7
62.9
66.5
73.8
67.7
source: CBR
Crude oil prices stabilize in the $40-45/bbl range in 2H20. This should have provided fundamental support to the ruble, ​as Russia’s trade and current account balances normalized.
However, analysts did not foresee the massive departure of foreign investors from the domestic government bond market. In 2Q20, the CBR’s radical easing of its monetary policy led to large inflows of foreign money into the OFZ market.
By the end of June, the majority of investors started to believe that the potential for more rate cuts by the CBR was largely exhausted. As a result, in July-September, Russia saw a mass exodus of foreigners from the OFZ market, putting significant pressures on the RUB exchange rate.
One dollar already received more than RUB80 momentarily and one euro almost RUB94 in the first week of November.
Since the beginning of June, the ruble has depreciated by 14% against the US dollar and by 17% against the euro. With the weakening of the ruble, inflation expectations have risen
67 ​RUSSIA Country Report​ December 2020 www.intellinews.com