If Brent oil prices are about $100 per barrel, then the devaluation of the ruble is still inevitable, said Anton Prokudin, chief macroeconomist of the company.
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Photo: Vladislav Shatilo / RBC
The dollar exchange rate against the ruble may exceed ₽100 by 2024, but it will not stop there and in 2025 it may exceed ₽200. Such a forecast introduced Anton Prokudin, chief macroeconomist of Ingosstrakh Investments Management Company, at the Strategic Session of the Russian Debt Market forum organized by the Expert RA rating agency.
According to the forecast of Ingosstrakh Investments Management Company, in 2024 the dollar exchange rate will rise above ₽120, and then above ₽140, after which the ruble will temporarily strengthen. On average, at the end of 2024, the dollar exchange rate, according to the forecast, may reach ₽124. However, already in 2025, the exchange rate of the American currency may approach ₽200 and even exceed this mark.
“In 2024-2025, we get in the main scenario that the prices of oil and other commodities fall by the end of 2024 and we get a fairly strong exchange rate carryover with subsequent strengthening. Approximately as it could be observed during the last strong devaluation in 2014-2016. If you greatly simplify the system, you can simply multiply the old data by two. Once the rate was ₽30–35, then it went to ₽86 and returned to ₽55. If we multiply by two, it turns out that ₽60–70 in the modern paradigm, somewhere around ₽190 in the limit, and a return to ₽110,” said Anton Prokudin.
Dynamics of the dollar exchange rate according to the Ingosstrakh-Investment model
He said that the currency model of Ingosstrakh-Investments predicted both the devaluation of the ruble, which happened at the end of 2014, and its unexpected strengthening in 2022. In general, for a number of years, the predicted indicators corresponded to the actual exchange rate. Speaking about the difference that has developed between the model and the actual rate at the present time, Prokudin explained that the model includes a rather large share of imports to GDP. Currently, the dollar exchange rate, according to the model, should be around ₽80. Such a value of the rate would be if the share of imports to GDP reached 20%. However, this figure fell below 14% last year. In the fourth quarter, according to preliminary data, the share of imports to GDP recovered to 15.2%.
Russian import forecast
Prokudin believes that imports will gradually recover during 2023. This is an important negative driver for the exchange rate, even if exports more or less stagnate at the levels reached, the expert stressed.
“The future is important – if we still proceed from the fact that imports as a share of GDP continue to grow, that is, import chains are restored, then in the future the model and the actual rate should converge,” he concluded.
Foreign exchange income and protection against ruble devaluation: analysis of replacement bonds
Prokudin noted that the model assumes a decline in oil and other commodity prices by the end of 2024 against the backdrop of a recession in the global economy. If we assume that the cost of Brent will still be at the level of $100 per barrel, and the prices of other commodities will remain at a high level, then the ruble will still fall.
“Devaluation is still unavoidable, but it will be much smaller in scale. In this case, after the weakening of the exchange rate, you can again see about ₽100 per dollar, but not ₽70, ”concluded Prokudin.
Forecast for the annual export of the Russian Federation
The chief macroeconomist of Ingosstrakh-Investments Management Company noted that an important component of the exchange rate dynamics model is export earnings. “Significant declines in exports just accompany the weakening of the exchange rate,” said Prokudin. According to him, in 2023, exports are declining, their current values are no more than $600 billion, as last year, but $420-450 billion.
“This is already negative for the exchange rate. Actually, the weakening of the exchange rate, which can be observed since the end of last year, is largely due to the negative dynamics of exports. Well, since there is a global recession ahead – here, probably, there is no need to specifically prove that it is already on the way – we still look negatively into 2024, expecting that export dynamics there will still be downward,” the expert explained.
He added that the rate is also affected by speculative factors that drive capital outflows. For example, inflation, trends in the federal loan bond market (OFZ), sanctions, and others.
The dollar exchange rate in March 2023: will it fall to ₽70 or rise to ₽77?
RBC Investments has compiled analysts’ forecasts for the dynamics of the dollar in March 2023. Several experts agreed that this month the dollar will trade in the range of ₽70-75, while the PSB expects the rate to rise to ₽78.2 by the end of the year.
Vladislav Silaev, senior trader at Alfa Capital, noted in a review on March 1 that the ruble closed February with a decrease due to the deterioration of the geopolitical and sanctions background, and the imbalance of budget revenues and expenditures had an additional impact.
Dmitry Postolenko, head of the fixed income management department at Pervaya Management Company, believes that gradually the measures to balance the budget policy and stabilize the financial system will support the national currency. “We are talking primarily about the ongoing sales of yuan within the framework of the budget rule by the Ministry of Finance, as well as the tightening of monetary policy by the Bank of Russia,” the expert added in an analytical review received by RBC Investments on March 1.
Marina Anufrieva, Aleksandra Khrisanfova.