Why only one drilling rig in the U.S. stopped growing ruble
The ruble showed a steady growth last week, again losing ground. The dollar retreated from a minimum this year of values up to $ 68,80 of the ruble. The Russian currency weakened amid falling oil prices. The situation changed only one drilling rig in the United States.
Shock week
For the week from 14 to 18 March, the dollar fell by 5 percent: 70,81 67,36 to ruble. To a minimum in 2016, the us currency fell against the background of news on financial and commodity markets.
First, last week there was a meeting of Committee on open markets FRS of the USA (16 March) and the Board of Directors of the Bank of Russia (18 March). The fed took no risks and refused to tighten monetary policy, i.e. raising the base rate. The Central Bank also was careful not softened his line, maintaining the key rate at 11 percent. The decision of the American regulator led to the weakening of the dollar, the Russian — to the strengthening of the ruble.
Secondly, on 16 March it became known the date of the meeting of the countries-manufacturers of oil. April 17 in the Qatari capital Doha from 15 States will hold talks on freezing the production of black gold. According to the head of the energy Ministry of Russia Alexander Novak, the corresponding agreement will be removed from the market 1.3 million barrels of oil per day. Previously, experts had estimated, according to which prices collapsed by 70 per cent happened because of the oversupply of 1.5-2 million barrels a day. Brent crude oil for 7 days has increased in price with up to 38,95 42,37 dollar at the peak (plus 9 percent).
In General, last week was rich in events affecting the dynamics of the ruble. And it demonstrates that the Russian currency is really a full-fledged market instrument, with freely determined price. “The ruble supported the expectations of the meeting OPEC and Russia, which will be held on April 17, dollar decline after fed statement about keeping rates and preparation for the tax period in Russia. Additional factors: the decision of the Central Bank of Russia temporarily not to ease monetary policy and the lack of hype surrounding the growth of the dollar — the worst in terms of macroeconomics are already being realized”, — said the Director of analytical Department of investment company “Golden Hills-Kapital AM” Mikhail Krylov.
“Keeping the Central Bank’s key rate to some extent helped, but wasn’t the trump card for the ruble. If a bet is slightly lowered, the ruble strongly suffered. Now the market is important, not the decision of the Bank of Russia, external factors — oil plus geopolitics,” — said the Deputy Director of analytical Department of investment company “OK Broker” Sergey Alin.
Power tower
Such a vigorous rise of national currency was interrupted on Monday, March 21. In the first hours of trading on the London stock exchange ICE cost of Brent crude oil fell to 41,14 40,50 dollars. The ruble, tied to the price of hydrocarbons, reacted accordingly. The U.S. currency rose to 68,80 of the ruble.
One of the causes of sagging oil prices — statistics on active drilling rigs in the United States. According to the company Baker Hughes, the number has grown to 387. During the week — only unit, but that was enough to put pressure on the commodity market. Previously, the number of drilling rigs in the U.S. has declined steadily: in early January 2015 was 1421, 12 months — already 516. Statistics of Baker Hughes have had an impact on price indices, since the closure of the towers may indirectly indicate the reduction of oil production and reducing the volume of supply. Activation of the 387 th installation says about increasing production, so the price and headed down.
The dollar stepped back from annual lows and on March 21, rose to 68,80 ruble
Photo: Ivan Sekretarev / AP
However, one should not expect that the dynamics on the oil rigs in the United States seriously will affect commodity prices. The global situation in the energy and currency markets is determined by long-term trends. The ruble will depend on them. Not without reason in the middle of the day on March 21, the oil returned to growth and by 16:00 Moscow time were fixed at level above 41 dollars per barrel. The dollar gave about 68 rubles.
“Statistics about the growth in the number of drilling rigs in the U.S. has added its contribution to the current movement, but rather looks like the pulled about and cannot be taken seriously, as the number of working units for the week increased by one unit”, — says the analyst Nordea Bank Denys Davydov. In his opinion, the market will continue to follow the statistics from the United States and China, and oil prices will fluctuate within 38-42 USD per barrel.
The future of the dollar
In the near future the ruble will affect not only global events, but also internal associated with economic processes in Russia.
“Within a month we expect the stabilization of oil prices in the range of 35-40 dollars per barrel, and the dollar/ruble within 70-80”, — says Mikhail Krylov from “Golden Hills-Kapital AM”. Soon the Russian currency will support the tax period in the Russian Federation (companies will have to fulfill its obligations in rubles, demand for them will grow along with the course; the peak of payments will be on March 25), and improved inflation expectations, continues the analyst.
On the other hand, there are negative factors: the slowdown in the reduction of oil production in the US, the expectation of the poor demand for oil, increasing the chances of interest rate hike by the fed will make the dollar more expensive. Mikhail Krylov predicts that at the end of March the U.S. currency will be worth 70-75 rubles in April — 75-80 rubles, Euro — 75,8-and 80,8 78,9-83,9 respectively.
According to the analyst of group of companies “Finam” Bogdan Zvarich, in the coming days, Brent could fall below $ 40, which will put pressure on the ruble. “The main positive factor for the Russian currency now is the tax period when the company sell the currency to create a ruble-denominated reserves, which in the future will go on tax payments. This keeps the demand for dollars and in case of negative sentiment on the currency market will constrain the weakening of the national currency,” he added.
“This week we expect continuation of strengthening of the Russian ruble. The dollar may drop to 67 rubles, Euro to ruble of 75.50”, — believes Sergey Alin from “Okay Broker.”
The coming week in the financial market promises to be quiet
Photo: Stefan Wermuth / Reuters
Indeed, the coming week promises to be relatively calm. At least, major events (like meetings of the U.S. Federal reserve) is not expected. If we leave out the possible exigent circumstances, then we can talk about that in the near future the ruble will fall. Moreover, there is a possibility of some strengthening. No wonder international banks believe the Russian currency is undervalued. On 2 March spoke at Deutsche Bank, March 21 — Goldman Sachs. Goldman Sachs analysts believe that in the next three months for the American currency will give 70 roubles, six months later — 66 rubles, a year — 62 of the ruble.
