December 2020 was definitely a successful month for the Russian ruble, albeit slightly less successful than November. In December, the ruble rose against the single European currency by 1.2%, while the euro did not stay at 91 rubles. and dropped to almost 90 rubles. The success of the ruble was largely fueled by the rise in the price of Brent oil, which rose by 9% in December and reached the important psychological level of $ 50 per barrel. An American electoral vote in mid-December confirmed Joe Biden’s victory by a wide margin over incumbent President Trump. On this news, both the currencies of developing countries and world reserve currencies began to grow against the dollar; so the euro in December rose against the dollar by 1.3% due to the fact that with the expected coming to power of Biden, trade wars will end, and from this point of view, the dollar is no longer regarded as the safest and most reliable asset.
The first month of 2021 for the euro-ruble pair will be very eventful.
In December, a historic event took place: the European Union and the United Kingdom, albeit with difficulty, were still able to agree on a trade deal for the period after Brexit. Thus, the UK will be able to safely leave the EU from January 1, but this exit will not turn into an actual trade war either for it or for the EU. It can be assumed that for the euro exchange rate, the exit of the United Kingdom from the EU “with a deal” will be a favorable factor contributing to its strengthening against the dollar and the British pound, while the strengthening against the ruble may depend on other factors.
After the New Year holidays in Europe, mass vaccination of the population will begin, first with a predominantly American-European vaccine from Pfizer and BioNTech, and a little later, perhaps already with a purely European development – a vaccine from AstraZeneca. The news of the start of vaccinations in itself creates a positive background in the financial markets. In Russia, the domestic vaccine against “covid” “Sputnik V” is already available to more and more broad layers of the population, and there are two more vaccines on the way, which are currently being tested. The world and, accordingly, the financial markets have a hope, albeit still timid, that in 2021 humanity will be able to overcome the coronavirus pandemic or at least reduce its impact. The news is favorable for both the ruble and the euro, however, since the ruble was greatly undervalued in 2020, it can be expected that in January 2021 the “Russian” will have rather high chances of strengthening against the euro and other world reserve currencies.
An event no less important for the Russian ruble will take place on January 4. The ministers of the OPEC and OPEC + countries will hold a video conference on this day, at which, in particular, they will discuss new quotas for oil production, which from January 1 will become softer for the countries participating in OPEC +. Statements that OPEC + plans to maintain this format in the future may become an impetus for continued growth in oil prices, which means for strengthening the Russian national currency against the euro. At the same time, the ruble should not flatter itself too much: its exchange rate in January may also be influenced by negative factors related to the oil market and geopolitics, such as an increase in Iran, as well as some other non-OPEC + countries, in oil production, or a threat new significant for the economy sanctions, if the Biden administration, not having time to come to power, immediately begins to spoil relations with Russia.
On January 21, the European Central Bank will announce its decision on interest and deposit rates. It is not so difficult to predict that the ECB will again keep the interest rate at zero, and the deposit rate at a negative level of -0.5%. The nature of the movement of the euro will depend on the accompanying comments and forecasts of the ECB. But there will be no CBR meetings on the key interest rate in January.
On January 29, Eurostat will publish the first preliminary estimate of the Eurozone GDP for 2020. According to the ECB’s forecast, the gross domestic product of the euro zone for this difficult year for the whole world in 2020 will fall by 7.3%, and for European countries this fall will be the strongest since the 40s of the XX century. However, in the eurozone, this forecast by the ECB is viewed as optimistic, since in the summer of 2020 a decline was predicted at the end of the year of more than 8%. If the statistics coincide with the optimistic scenario of the ECB and analysts of European investment banks, or even exceed it, the euro will rise against the ruble, and if it is closer to the pessimistic scenario, the euro will weaken.
It is assumed that the euro / ruble exchange rate in January 2021 will be in the range from 88 to 93 rubles. for the euro.
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