Page 76 - RusRPTDec21

7.0 FX
RUSSIA -FX
2Q19
3Q19
4Q19
1Q20
2Q20
3Q20
4Q20
1Q21
2Q21
3Q21
Nov21
Currency (units per EUR) (eop)
72.1
71.5
69.8
76.3
78.9
88.7
91.3
90.6
88.8
86.4
84.1
Currency (units per USD) (eop)
64.3
64.7
63.0
69.3
71.7
75.4
76.5
75.5
73.8
73.4
74.5
Currency (units per EUR) (average)
72.6
72.0
69.7
73.3
79.5
85.9
90.8
89.6
89.4
86.4
83.2
Currency (units per USD) (average)
64.6
64.7
62.9
66.5
73.8
73.6
76.2
74.3
74.2
73.0
72.9
source: CBR
Previously BCS believed the ruble could strengthen to Rb69-70/$by end-2021 – supported by positive headlines from the world of politics (both Moscow and Washington confirm a summit meeting between Putin and Biden before the year-end is still possible), as well higher appeal for ruble carry trade operations after the CBR, as we expect, hikes the key rate in December.
While these factors remain in play, we believe that the ruble could stay under considerable pressure in the next 1-2 months, probably longer, given the global correction, weaker oil prices, threat of the pandemic worsening, and looming monetary tightening by world central banks with geopolitical risks still running high.
In addition, the weakening of the ruble at the end of November will eventually offset the positive effect on inflation from its strengthening in September-October, which may lead to a new wave of import price growth in Russia at the end of December or in January.
BCS new forecast for 1 January 2022 is Rb74.5/$, while the estimate for end-2022 remains intact (Rb71/$).
Foreign currency liquidity. In October, the situation with foreign currency liquidity remained calm. The amount of highly liquid foreign currency assets was virtually unchanged compared with September (Chart B-1-1). The spread between interest rates in the FX swap and RUONIA (basis) segments ranged from -27 bp to 8 bp (Chart B-1-2). The average basis in the October AP was -7 bp (in the September AP: -9 bp; year to date: -7 bp).
Foreign exchange market. By the end of October, the ruble appreciated by 2.5% to 70.94 rubles per US dollar. At its peak, the ruble reached 69.25 rubles per US dollar, the exchange rate recorded at the end of June 2020. Thus, the ruble has been strengthening for virtually four months in a row, predominantly
76 RUSSIA Country Report December 2021 www.intellinews.com