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Fred Cole

An editor at FOMOdrive

  • Jul 07, 2023
  • 3 min read

Nabiullina denied the collapse of the ruble in order to replenish the budget

US dollar with ruble coin

On Thursday, the dollar exchange rate neared 94 rubles/$, while the euro surpassed 102 rubles.

At the start of Wednesday, the deputy chairman of the Central Bank declared that there were no risks to financial stability, which caused a rapid decrease in the same day.

Raiffeisenbank holds the opinion that the ruble is not reflective of reality.

Sberbank's CEO expressed that it is prudent to anticipate the appreciation of the ruble.

The head of the Central Bank dismissed the notion of deliberately weakening the ruble in order to fill the budget.

The dollar exchange rate rose by almost three rubles during the opening hours of trading on Thursday, reaching a new peak since the end of March 2020 at 93.85 rubles/$.

Alfa Capital notes that a variety of fundamental factors have contributed to the decline of the ruble's value, such as the projected budget deficit for July and the Ministry of Finance's decision to sell fewer yuan than before. Nevertheless, the Central Bank reassures that there are no financial risks for the economy.

According to Freedom Finance Global, the statistics on the Russian GDP have caused the devaluation of the ruble. An initial evaluation of the GDP for the first quarter of the year showed a decrease of 18.6% compared to the fourth quarter of 2022, which was attributed to the decrease in oil prices and the implementation of the "price ceiling" for Russian hydrocarbon raw materials.

Yesterday, the Federation Council approved the admission of non-resident banks to trading, as noted by Promsvyazbank, which indirectly confirms that there is still a demand for foreign currency from large players on the market. This is further evidenced by an increase in the average transaction on the market.

Elvira Nabiullina, the head of the Bank of Russia, warned against conspiracy theories about the forced depreciation of the ruble during her speech at the Financial Congress of the Bank of Russia. She stated that the current decline of the ruble's exchange rate is due to the dynamics of foreign trade.

The head of the Central Bank stated that when the rate weakens, conspiracy theories arise, such as a deliberate easing to increase budget revenues, or other theories.

German Gref, the head of Sberbank, stated that the ruble exchange rate is not at its best right now, and it would be wise to wait for it to strengthen. His opinion was echoed by Andrey Kostin, the head of VTB, who believes that the decline of the ruble will soon come to an end and the Russian currency will start to gain strength.

According to Raiffeisenbank, the ruble is trading weaker than its fundamental value. Alfa-Bank is forecasting a 50 bp increase in the key rate at the upcoming meeting on July 21.

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