Low oil prices and the “new Swamp” could undermine the stability of the national currency
Alexey Weroance
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Photo: YAY/TASS
Deputy Minister of Finance Maxim Oreshkin said that allows for “stress scenario”, in which oil will cost around 30 dollars per barrel. And — for a long time.
According to Oreshkin, the main risk is a hard landing” of China’s economy. In the baseline scenario, the oil price hovers around $ 40-50 per barrel, global growth is less than 3%, and the US economy growth slows down, he added.
Of course, with a sharp drop in oil prices will hardly be possible to avoid a sharp devaluation of the national currency.
While the ruble is quite stable, despite the fact that from the beginning of July the price of Brent crude fell by 6.6% – from $ 50 to $ 46.7 per barrel. Moreover, the dollar on the MICEX over the same period fell more than the ruble, the Euro — almost half of the ruble, the Russian currency has updated the records with the end of 2015.
However, this stability can come to an end in the very near future. In an interview, “Reedus,” the financial analyst of one of the Moscow commercial banks Sergey Sergeyev saidthat the summer the stability of the ruble was ensured by a combination of several factors. First, the Russian players in the foreign exchange market of physical persons or legal — just dried up ruble funds to convert them into dollars. In addition, the summer months have seen a record demand just in time for the ruble as state-owned corporations had to pay back to shareholders in 2015.
The second factor is political. The government and the Central Bank don’t want to worry fellow citizens on the eve of elections to the state Duma.
Meanwhile, according to the survey “the old”, published on the website of the Central Bank of the Russian Federation, the share of Russians who believe that in a year the dollar will fall against the ruble, declining for the fourth month in a row. Only 13% of Russians believe that after a year the ruble against the dollar will be higher than it is now.
But those who predicts appreciation of the dollar, two and a half times more — 30%.
However, despite the declining confidence in the Russian currency, most Russians still prefer to save money for a rainy day in rubles. In August 2016 this option is called optimal 72% of respondents “old”.
In turn, experts of the Central Bank predicted the persistence of volatility of ruble exchange rate in the third quarter of 2016.
— In fact, if oil prices begin to decline, and before the election, the ruble artificially will keep at the current level, the devaluation of capital will accumulate, ” says Director of public relations of the financial group “Kalita-Finance Alexei viazovsky. — A lot depends on how will fall oil prices. I think that decline will be. Will not go away, the problem of imbalance of supply and demand when oil is offered more than it should for the global economy. But the main contribution to the fall in oil prices makes monetary policy of the fed, which is going to raise the key rate. Thus, the dollar strengthened to all currencies. And the price of oil in dollar value will fall.
Before the parliamentary elections a severe devaluation of the ruble will not allow is clear. I don’t think that in the coming months the dollar will be worth more than 70 rubles. But if oil will fall for a long time, then at the end of September — October we can get 80 rubles per dollar and even more.
Another important aspect — as, indeed, after the election. The last elections to the state Duma, as we remember, were in a state of extreme instability in the political system of Russia. I mean street protests, Marshy area. Then began the flight of capital from the country, which traditionally increases the fall of the ruble. If this time again it will happen some political excesses, it may seriously affect the rate of the national currency. We can see investor panic, capital flight and so on.
If elections will pass without serious incidents, the Central Bank can stabilize the ruble exchange rate, do not give him much to sink. Another thing is that the Central Bank does not really want to do it. And understandably so — when oil prices fall and the ruble keeps the same course, the Russian budget loses incomes. Devaluation thus saves oil companies and does not heavily fall in budget revenues.
“SP”: — If the worst forecast of the Ministry of Finance is implemented, and the oil will cost 30 dollars for a long time, to what extent can sink the ruble?
— In Russia there is such specificity — November-December account for a large portion of foreign debt payments. Then there will be an increased demand for the currency. If it is accompanied by capital flight, as it was in December last year, it is possible to follow approximately the same relationship: for every dollar fall in oil prices, the ruble will lose about 50 cents against the U.S. currency.
“SP”: — is There any reason for the fall of the ruble is not associated with the oil prices?
— Only one reason, which I already mentioned: the monetary policy of the USA. Once in December last year they already increased the key interest rate. Now again resumed conversations, against the background of economic growth in the United States the rate may be increased once or even twice. What you need to withdraw the enormous liquidity, which in previous years has provided the banks. This leads to the fact that speculators are moving away from trading oil and the dollar strengthened across the spectrum traded on the commodity exchanges.
And based on what a “stress scenario” of the Ministry of Finance on the price of oil?
— We have repeatedly seen that the price of oil often is unpredictable, says a leading expert of the national energy security Fund Igor Yushkov. Often the statements of officials can affect the price, but usually only slightly.
Yes, the main factor, which now all refer — a slowdown in the Chinese economy. On the other hand, there are many other factors that can affect oil prices. In particular, the latest data published by the Office of analytical information of the United States, saying that the volume of shale oil in America continue to fall. In July, he falls almost every day in a thousand barrels. Nobody notices, because it is now an established trend. And on exchanges traders typically act out news that will change any trends. Roughly speaking, a fall of shale oil are all used, but on the news of the slowdown in the economy lot at once willing to speculate.
If we are to build a forecast for the oil price in the so-called fundamental factors — production and consumption — in the long run, the opposite should prevail the trend of rising prices for hydrocarbons, because now many countries have drastically reduced the so-called exploration drilling. Only in Russia it is increasing. But in General in the world — established historical record. This means that sooner or later there will come a time when older fields begin to dwindle, and the development of new need to spend time. There is a shortage of oil, which immediately lead to higher prices.
This is monetary factors dominate over the fundamental. Much depends on whether investors to take loans and buy them on futures. If you can’t, and it depends on, whether will raise the key rate, the fed will fall and oil prices, as demand for futures will fall sharply. And again we can see the price per barrel even cheaper $ 30.
