Yesterday was this month’s last day to pay taxes. Having completed this task, banks quickly lapsed back into their old ways, starting to purchase currencies. It was only natural then for this to trigger the ruble’s new record decline against the basket of two currencies – the dollar and the euro – which appreciated from RUB 37.77 to RUB 38.75 in a single trading session on Wednesday, the RBC Daily newspaper reported.
The Russian currency opened in negative territory today, as well, as the ruble sank further against the basket of two currencies to RUB 39.38 at the beginning of the session, and the dollar reached a new all-time high of RUB/USD 34.6. Experts say, meanwhile, that the ruble is likely to depreciate further, down to at least RUB 41 against the basket of two currencies.
“Essentially, we already started purchasing currencies on Wednesday, and had no reason to believe that the dollar would fall on Thursday,” Aljba Alliance bank’s dealer Artyom Roshchin noted. Head of Metallinvestbank’s conversion operations department Alexander Panasenko, on the other hand, said the bank bought currency that the Bank of Russia sold when the basket of two currencies hit the RUB 38.75 mark. According to his estimates, the Central Bank offloaded roughly $500m yesterday. Panasenko does not believe, however, that the Central Bank was using the sale to signal to the market that it would keep participants away from attaining the upper end of the exchange rate band (RUB 41) as soon as possible. “The Bank of Russia is simply trying to smooth the rough edges off intraday fluctuations on the currency market,” he stated.
Alfa-Bank said in a study that heavy pressure on the ruble would persist unless short-term liquidity injections in banks stop. The bank’s analysts note that tax payouts have forced a number of market players to cut their currency positions, thus helping to stabilize the ruble exchange rate.
According to head of MDM Bank’s economic analysis department Nikolai Kashcheyev, expectations for the ruble to continue to devaluate still dominate the market. “Perhaps the fact that oil has, despite all things, stabilized at a low level is contributing to these developments, and moreover, expectations that a further RUB 900bn (approx. USD 27.09bn) will be injected into the banking system to support the capitalization of state-controlled and other banks aren’t inciting any confidence that the Central Bank won’t expand the exchange band further,” the economist noted.