Page 54 - RusRPTFeb20

The appreciation of the ruble has been boosted by the rise in oil prices as it increases Russian export earnings and supports capital flows to the country.
Urals oil prices averaged $66 a barrel early in the year, 15% higher than a year earlier. On the other hand, the impact of the rise in oil prices on the ruble has been dampened by central bank foreign exchange purchases in accordance with the budget rule. Indeed, in recent years the link between the ruble and oil prices seems to have weakened.
In real terms, the ruble has appreciated slightly more against the dollar and the euro than nominally. Although inflation slowed in Russia late last year to just 3% in December, it is still higher than in the euro area and the United States. At the end of last year, the trade-weighted real exchange rate of the ruble was 8% stronger than at the beginning of the year.
However, the ruble is not expected to continue its appreciation this year. According to most analysts, this year's average is expected to be around 65 rubles against the dollar. According to the Russian Ministry of Finance's forecast, which is based on the Russian budget, this year's average dollar rate is RUB65.7.
The Russian ruble performed the best among the 15 emerging market currencies in 2019​, appreciating on average by +11.6% against the other currencies in the basket, the latest edition of the Moodie Davitt SPEND Index has shown.
The Thai Baht was second with a +8.0% increase. Both the Russian Ruble and the Thai Baht are regarded as “emerging market” currencies – effectively meaning that they are more volatile and subject to major swings in their valuation compared to currencies from more mature and stable economies.
With a SPEND Index at 89.72, as for Russia, a basket of products that cost 100.00 rubles on 31 December 2018 now only costs 89.72 rubles on average (all countries and destinations), a significant saving of +10.3%.
Over the counter (OTC) trading of the ruble outside of Russia has grown by 84% over the past three years ​and now it has overtaken trading the ruble against foreign currencies inside the country for the first time, according to Bank for International Settlements, RBC reported on December 12.
According to BIS, in April 2019, the most recent data available, the average daily turnover of “offshore” ruble trade amounted to $40bn, which is 84% more than in 2016.
The largest increase in foreign transactions among emerging market currencies was the Indian rupee, up 179%, Hong Kong dollar (176%) and Korean won (97%) putting Russia’s ruble in fourth place.
Inside Russia the transactions between residents was half the offshore trading in the ruble, or $20bn, which was down by a quarter (27%) since 2016.
Finally, for resident-non-resident operations, the average daily turnover in the ruble amounted to $12bn - 38% more than three years ago, RBC reports.
54​ RUSSIA Country Report​ February 2020 ​ ​www.intellinews.com