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Peter Davis

An writer at FOMOdrive

  • Aug 03, 2023
  • 2 min read

The ruble collapsed, updating the “bottom” from the spring of 2022

On Wednesday, the ruble experienced a sharp decline, reaching its lowest point since March 2020.

The downgrade of the US sovereign rating caused investors to flee from risky assets, which in turn facilitated the fall of the ruble.

The dollar exchange rate rose by 2%, increasing to over 94 rubles/$, adding more than 1.8 rubles.

For the first time since March 28, 2022, the euro has been valued at 103 rubles.

At the end of trading on Wednesday, the ruble experienced a sharp decline due to investors fleeing from risky assets after the international rating agency Fitch lowered the sovereign rating of the United States, as reported by Interfax-CEA.

The ruble is feeling the strain due to the possibility of a decline in the Russian foreign trade balance indicators, caused by an increase in imports and a decrease in exports.

The BCS notes that the ruble is still being affected by the lack of equilibrium between the demand for foreign currency and its availability, which is insufficient to support the resumed imports.

Alfa Capital observes that the foreign exchange market is disregarding the benefits of the increase in oil prices in July. It is evident that the amount of supply to purchasers of foreign currency is inadequate.

Veles Capital investment company predicts that the dollar/ruble pair will move within the range of 90.0-92.5 rubles/$ in August, with potential short-term exits beyond these boundaries.

Sberbank predicts that the ruble will remain undervalued until the end of 2024 and will only moderately strengthen compared to current values, with an average exchange rate of 85 rubles per dollar in the second half of 2023 and 2024.

On Thursday, the Ministry of Finance will release a report detailing oil and gas revenues for the month of July, as well as the amount of foreign exchange transactions that will be allocated to the budget for the following month.

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