Analyst: Jul for the ruble will be a busy month

News background in July will be for the Russian national currency “in General, tense.” This opinion was expressed by the “Rosbalt” Deputy head of IAC “Alpari” Natalia Milchakova.

She notes that “in June for the Russian ruble was not as successful as the previous two months, and in the final month of the second quarter “Russians” fell against the U.S. dollar by 1.8% and 2.7% against the Euro, despite the continued increase in oil prices”.

“most Likely, the further strengthening of rouble was prevented by the expectations of weak economic results of Russia in the 2nd quarter and increased tension in relations between the US and China,” says the review expert.

Speaking about expectations for July, it primarily considers it important “to monitor events on the oil market.” “At the request of the Secretary-General of OPEC, Mohammed Barkindo, to complete the rebalancing of the oil market is still far away. So, oil prices will greatly depend on compliance by the parties to the transaction OPEC of quotas on oil production decline. If OPEC members are disciplined to implement the agreement, it is possible that in July the price of oil can reach $45 per barrel. It may have a positive impact on the ruble, but it is also important to understand that at this price level, some producers of shale oil in the U.S. will begin to restore production, which will increase the supply of oil and again delay the return of the oil market to a normal balance,” Milchakova does not exclude.

secondly, she continued, “the relationship between China and the United States can again deteriorate.” “A new round of controversy between the two great powers, this time from Hong Kong, may again escalate the war of sanctions and even a trade war, although the latter is a possibility in conditions of economic crisis and is still present in the global agenda of the pandemic coronavirus appears to be very small. However, it due to political reasons. Therefore, hard and even militant rhetoric of officials of the two countries could spook financial markets, first and foremost, the currency markets of developing countries for a long time, up to the date of the presidential elections in the United States,” warns the analyst.

in addition, she points out, “the Bank of Russia on July 31, will announce its next decision on the interest rate”. “We believe that the reduction of the key rate will continue, and with a fairly high probability that the regulator can reduce the key rate by 0.5 percentage points to 4% and reached a new record of reducing rates. The ruble often reacted to the decision of the CBR’s key rate, paradoxically, but this time it is possible that the ruble in the case of a rate cut might react quite traditional, that is, the cheaper the dollar and the Euro, as the effects of the reduction in the key rate this year on the real sector of the economy will appear only in the 2 half of the current year”, — said the expert.

Thus, she concludes, “the news background in July in General will remain tight”. “Our forecast for the dollar / ruble exchange rate is 67-72 of the ruble. At the exchange rate of the Euro against the ruble expected range of values to 75-80 rubles”, — adds the analyst.

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