The ruble resistant to the purchases of foreign currency by the Central Bank of the Russian Federation

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The outbreak of currency purchases by the Central Bank to replenish reserves of the Ministry of Finance does not cause significant damage to the ruble. As of 12:00 GMT on Thursday the domestic currency against the dollar at 66,46, though at maximum it reaches 66,26/$, rising by another 0.75 percent compared to the same time yesterday’s trading session. A couple of the ruble with the Euro current at the moment the level is 75,72 against 76,88 a day earlier.
The seasonal inflow of foreign currency for current account transactions, partly associated with the recovery of the interest of global investors to emerging markets in the first quarter (see below), grist to the mill of the Bank of Russia, in large measure, untying his hands. Probably, the real correction of the oversupply will suffer the ruble later, as yet only in January, net inflows of total assets, according to various estimates, can be up to $14 billion.
Today – again very handy for the Central Bank – released data about the increased positive balance of trading balance of Russia for January-November of 2018, which totaled $191,4 billion, So the 2011 record of $198 billion, is likely to be broken. According to the Customs service of the Russian Federation, from January to November 2018, the total volume of Russian trade transactions amounted to $629 billion, demonstrating a growth of almost 20% in annual terms.
In turn, Russian exports increased by 27.5% to $410,2 billion As we remember, in 2018 all will remember the rapid fall of many emerging market currencies against the green – in particular, the Turkish Lira, Argentine peso, South African Rand, the Ukrainian hryvnia and the Russian ruble. There is no doubt that such outstanding data on foreign trade mainly owe to the phenomenon of devaluation of the ruble.
Indeed, the current uncertainty prevailing in global markets due to issues with the implementation of the fed’s plans of further strengthening of US interest rates plays into the hands of debt markets in developing countries. Major American and multinational banks in their recent review emphasized the importance of low debt – to-GDP indicator, which once again “in Vogue” in the investment community. As is known, in Russia this indicator – for obvious reasons, one of the lowest in the world. As a result, perhaps the Finance Ministry will be able to attract more funds in the debt market than was scheduled on the basis of the vague results of the 4th quarter of 2018. By the way, maybe this will reduce the need to purchase a large amount of currency in the market.
Meanwhile, one of the main, most discussed, instruments of foreign exchange markets is the British pound. As of 12:30 GMT, “British” impressively strengthened 1,2846 to 1,2882 in tandem with the dollar. According to British analysts and the Bank of England, Mark Carney, the stability of the “British” owes to the positive expectations of extending the so-called “article 50” (EU is considering plans to extend until 2020 the validity of article 50 of the Lisbon Treaty on European Union, which sets the rules and the release dates of the United Kingdom from the EU) and, consequently, reduce the risks of a “hard” Brexit, in which Britain left the Union without any clear mutual agreement that it is not necessary for any of the parties. Now Mei has to submit to the Parliament its “plan B” for January 21.
Vladimir Rojankovski,
“International Financial Center”