Page 92 - RusRPTJan23

Renaissance Capital economist Sofya Donets attribute this to the low cost of Russian oil and concerns about exports.
In December, the average price per barrel of Urals fell to $56 from $66 in November, Orlova recalls. After the embargo on the supply of Russian oil to Europe and the G7 price ceiling came into force on December 5, oil exports from Russia also decreased physically.
Seasonal demand for currency
Simultaneously with the reduction of the foreign exchange supply, the demand for the currency is growing. This is a seasonal phenomenon: the upcoming New Year holidays are forcing Russian investors to go into protective assets, mainly currency, explains Orlova. Before the holidays, imports traditionally increase, mainly due to the Asian direction, BCS Express notes. This, among other things, explains the fall of the ruble against the yuan, writes Otkritie Investments. Also, the ruble may be pressured by the withdrawal of funds by foreign companies that sell their business in Russia.
A decrease in exports and an increase in imports lead to a reduction in the trade surplus, which, due to the imposition of sanctions since the spring, was huge and supported the ruble for almost the entire year, analysts say. And this is not bad in itself: Donets predicts that imports will reach pre-crisis levels by the end of the year, and the trade surplus will shrink to a more balanced level.
Anomalous activity
Some analysts believe that the market was influenced by single large currency transactions. Dmitry Polevoy, investment director of Loko-invest, speaks about this. According to him, analysts were expecting the ruble to weaken by the end of the year, but such a rapid and sharp fall caught many in the market by surprise. He believes that the Russian currency is being pressured by "sharp flows to buy foreign currency."
“An abnormal surge in trading activity in the foreign exchange market” was also noticed in Tinkoff Investments: according to their data, trading volumes in the $/ RUB pair on the Moscow Exchange jumped by 50-70%. “The exchange rate has grown by more than 15% since the beginning of December, in one day the ruble fell by more than 5%. Such daily growth is impossible without good reasons, if the rate was quite stable for several months before that, ”the analysts write. Tinkoff Investments does not believe that the ruble is affected by oil sanctions, but they believe in an unknown large buyer.
Is it possible to talk about speculation in the market without additional information is not clear. On the one hand, Polevoy notes, currency can
92 RUSSIA Country Report January 2023 www.intellinews.com