On Friday, June 30, the dollar exchange rate on the Moscow Exchange rose above 89 rubles for the first time since March 19, 2022. The euro exchange rate, in turn, exceeded 97 rubles during the auction. Over the past month, the dollar has grown against the ruble by almost 10%. The growth of the exchange rate of both currencies began in the spring of 2023. At that time, many experts associated it with the exit of foreign companies from the Russian market. Evgeny Nadorshin, Chief Economist at PF Capital consulting company, told The Insider what the current jump is connected with and what dollar and euro exchange rates should be expected in the future:
Did Prigozhin's rebellion affect the appreciation of currencies
The campaign of mercenaries against Moscow did not just lead to the fact that some people preferred to leave the capital once again (and some, maybe for the first time). It seems that in the end, less returned than left. It is possible that these people move their funds abroad.
However, it is not only about those who have left. Uncertainty in the Russian economy and politics only increased after this episode. This is an important point, because those who remained in the country may well be inclined to move funds to foreign jurisdictions, worrying about their safety. This is completely justified, given the events of the past week.
Which of the factors for the depreciation of the ruble is the main
Right now we can see the impact on the exchange rate of capital flows. Whether this phenomenon will be temporary, how much it will shift the ruble, I cannot say. But the significant changes that we saw during Friday are more related to the withdrawal of capital, and not to trading operations.
When the oil company Shell sold its stake to Novatek on the previous fall of the ruble, many said that this was what influenced the appreciation of the exchange rate. But I believe that the reason was local speculators.
According to my feelings, a decent part of the depreciation of the ruble was due to trading operations. Recovered at the level of last year and continues to grow imports, reduced exports. This is due, among other things, to low prices for oil and other raw materials, as well as because gas supplies have decreased and come at a reduced price.
These two factors – growing imports and declining exports – formed the main trend of the ruble depreciation both in the medium and long term. This is not typical for Russia. For the first time since 1998, trading operations have a serious impact on the exchange rate. The export of resources can no longer ensure stability and appreciation of the ruble.
What happens to imports
The auto industry is a clear example of how the so-called “import substitution” takes place in our country. In fact, one import is replaced by another – the car is simply brought from China disassembled, and then, like a Lego constructor, it is assembled at a Russian enterprise, after which a domestic brand is pasted on it. As a result, no "import substitution" occurs – on the contrary, imports are growing.
Or, for example, there is a discussion of possible restrictions on the import of servers into Russia. And then we see news that a number of Russian companies are buying them for future use, not intending to install and use immediately. This is also an increase in imports.
The fact that "import substitution" is simply the replacement of one import for another, and not at all for full-fledged local production, is not surprising. It is almost impossible to launch complex production on an industrial scale in a year.
Therefore, the vast majority of import substitution projects, if they are destined to be implemented at all, are medium-term projects, measured at best in several years, or even long-term ones. Some of them may take ten or more years to implement. You can quickly replace only one import with another, or carry out the former through other channels.
Why exports are falling
With export, everything is simple. This is influenced by the not-so-favorable external environment, and the decline in energy prices, and certain volume losses due to self-limitations, as was the case with gas.
The example of the timber processing industry clearly shows that its products from the moment they fell under the sanctions have not been able to return to the previous volumes of foreign markets. Yes, and there are some difficulties on the inside.
It turns out that our exports are not only not growing, but in some cases even falling. It is facing growing imports – that's the main reason why the Russian ruble has been gradually depreciating. Since December, the movement of the ruble has been predominantly unidirectional.
Good indicators that we see in operational statistics, to a large extent, explain the cheap ruble. Because they buy mostly relabeled imports. In a number of cases, including the auto industry, this also determines its further growth, which, unfortunately, can lead to a further depreciation of the ruble.
What dollar exchange rate can be predicted this year
As for forecasts, for this year I expected the ruble to become cheaper and predicted 80 rubles per dollar, when it was still in the range of 50-60 rubles.
I was pretty careful because last year was a surprise for me and for many, because everyone missed the course grades. Since the spring of this year, it has been clear that instead of 80 rubles per dollar, it could be 85 or 90.
For the time being, I will not rush to change my forecast, because it is not entirely clear how capital and non-capital operations will be mixed, how stable the trend to restore production with a change in the trademark on products will be. It was not entirely clear to me how much the local consumer was willing to borrow and how much banks were willing to lend in the current environment with high lending risks.
I see that the growth is largely accounted for by credit resources in order to simply determine what scale of imports we can deal with. There is still a possibility that this surge will subside in the second half of the year. The situation will level out a bit, and we will be able to see the ruble depreciate in the first half of the year and stabilize in the second.
So I'm presenting the basic scenario today. But there are different options and risks. The events of the end of last week greatly complicated the situation with the exchange rate. If the fall of the ruble drags on for several weeks, then we will again see the dollar at 100 rubles this year.