The ruble rose sharply at the end of the week - what's going on?

On Friday, the ruble experienced a sharp increase following a week of stability.

The dollar exchange rate dropped by more than 1.7 rubles, bringing it below 96 rubles.

As the tax period draws near, the Russian currency is becoming stronger due to an increase in the availability of foreign currency on the market.

At the end of Friday's trading, the ruble showed confidence in its growth, as exporting companies were preparing for October tax payments, according to Interfax-CEA. This caused the US dollar exchange rate to drop to 95.32 rubles/$, which is 1.73 rubles lower than the closing level on Thursday. This is the first time the dollar has been below 96 rubles since September 25.

Exporters must transfer VAT, insurance premiums, personal income tax, income tax, mineral extraction tax and excise taxes to the budget by Monday, October 30th, one week from now.

Players are keeping a close eye on the news about the steps taken by the authorities to stabilize the ruble exchange rate. Furthermore, the Central Bank of the Russian Federation is expected to raise the key rate at its meeting on Friday, October 27.

Bank St. Petersburg suggests that exporters may have started to gradually sell their foreign currency earnings in anticipation of the tax season, which could explain why the ruble is strengthening.

In October, the amount of taxes paid will be particularly high due to the payment of the quarterly AIT (additional income tax) and the rise in oil prices.

BCS suggests that the Central Bank raising the key rate and introducing macroprudential limits could help to strengthen the Russian currency. This could eventually lead to a decrease in the demand for foreign currency and imports.

VTB assumes that the dollar may continue to drop to 92 rubles by the end of the year. Without the government buying currency under the fiscal rule, increasing oil prices will cause the ruble to strengthen.

The overheating of the economy and the excess of state budget expenditures above the budget rule prescribed may lead to an increase in demand for imports, which could restrain the growth of the Russian currency at the same time.