From April 7 to May 7, the Bank of Russia will buy foreign currency on the domestic market within the framework of the budgetary rule for 185.7 billion rubles, which is 25% more than in the previous period. Monthly currency buying volumes peaked since February 2020.
Does this mean that, taking into account the sanctions risks, the ruble exchange rate will only fall in the coming month? AMarkets experts answered the question of Fortrader magazine.
– The activity of the Bank of Russia in buying foreign currency creates an additional condition for increased demand for the dollar, which is undoubtedly an argument in favor of further devaluation of the ruble. Despite the fact that the Bank’s interventions are determined by the budgetary rule, they may also indicate a worsening of the regulator’s forecast regarding the ruble exchange rate. We believe that this is exactly what is happening now.
In addition, the persisting sanctions risks from the West, the strengthening of the dollar, as well as the potential for a decline in oil prices will continue to exert pressure on the ruble. In just one yesterday’s trading session, the price of one barrel of Brent sank 3.5%. The reason for the decline in prices was the fear that the increase in the number of new cases of coronavirus in the world will stall the recovery in demand for hydrocarbons. French President Emmanuel Macron last Wednesday announced a nationwide lockdown, which took effect Saturday and will last 4 weeks. In addition, the coronavirus situation is worsening in India, Brazil and China.
Market participants also continue to analyze the results of the last week’s OPEC + meeting. Recall that the key oil-producing regions agreed on a gradual increase in oil production in the period from May to July by 1.14 million barrels per day. With that said, the sell-off of the USD / RUB pair may continue with a target around 80.00.