The ruble against the U.S. dollar in the past month increased by 3%

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The real effective exchange rate of the ruble against the U.S. dollar in the past month increased by 3% (compared to September). With the beginning of the fall was 10.6%. Against the Euro the ruble in October rose by 4.6%, from the beginning of the year the rate fell to 7.1 per cent. Good or bad? Let us look at this issue. The real effective exchange rate (eng. real effective exchange rate, REER) is an indicator characterizing the dynamics of exchange rates. Is calculated as the weighted sum of the indices of the real exchange rate in a given year relative to the base.
Each index is multiplied by the specific weight of the countries-trading partners in foreign trade turnover. Thus, the standard method of calculation of the real exchange rate based on the ratio of consumer price indices (CPI) in the country and abroad, weighted in proportion to the share of every country in external turnover.
The growth of the real effective exchange rate of the national currency is bad for exporters as it makes their products more expensive on specific foreign markets. Conversely, if he falls, exports become relatively cheaper. And this, ceteris paribus, increases their competitiveness in foreign markets. No wonder such exporting countries as China and Japan are trying to make their currency cheaper against the currencies of major countries-trading partners. For example, in relation to the U.S. dollar.
It turns out that for our exporters the best “cheap” ruble. And they have all chances to receive it. Based on the cumulative effects of a long-running negative factors on the exchange rate (“hell” a package of U.S. sanctions and the constant threat of increasing sanctions pressure from the “collective West,” a drop in oil prices, a record of payments to corporations on foreign debt in December, etc.) at the end of this year we can expect the dollar and the EURO against the ruble in the area of 72.50-and 73.80 80.60-81.80 respectively. For comparison: at the time of writing this forecast USD/RUR was quoted at 66.03, and EUR/RUR – 74.89.
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Andrew Perekalskiy,
Analyst,
Finist