Nervous December. What awaits the ruble, dollar and euro in the last month of the year? How much will the ruble be worth in December?
Traditionally, December marks one of the annual peaks in the volume of external debt payments. Before the new year, Russian corporations and the state will have to return more than $16 billion to creditors. AiF.ru learned from experts whether this factor will become an obstacle to the strengthening of the ruble and what other events could weaken the Russian currency.
Zvarich Bogdan, analyst at Finam Group
In our opinion, the main support for the Russian currency in December will come from OPEC's decision to reduce production. This factor will support the energy market, which, in turn, will contribute to the strengthening of the ruble.
Among the negative factors, one can highlight the high volume of payments on external debt, which will contribute to the demand for foreign currency and play against the ruble. As for the meeting of the US Federal Reserve, rates have already been included in the regulator’s rate increase, but players will pay attention to the statements of representatives of the Federal Reserve, which should shed light on the Fed’s further actions in the light of monetary policy. If they turn out to be quite strict and foreshadow a further rise in rates in the near future, this could have a negative impact on the entire range of high-risk assets, including the Russian ruble.
Our forecast for the dollar exchange rate in December is 62 rubles, for the euro – 66.8 rubles.
Andrey Lyushin, Deputy Chairman of the Board of Loko Bank
First of all, the ruble may be threatened by factors such as payments by Russian companies on external debt and an increase in the US Federal Reserve rate. However, in our opinion, their influence will be minimal, since the companies already have cash for settlements, so they will not “vacuum clean” the Russian foreign exchange market. If we talk about raising the Fed rate, then these expectations have long been included in the current exchange rate of the Russian currency.
The decision of OPEC and other countries to begin reducing oil production is a key factor that supported the ruble and will stimulate its strengthening for a long time. According to our forecasts, the ruble exchange rate will continue to fluctuate between 63.5 rubles and 65.5 rubles in December.
Dushechkin Sergey, financial expert at Analytics Online
The ruble can, of course, be supported in December by rising oil prices, as well as internal economic fundamental factors reflecting a significant contraction in the Russian trade balance in 2016. The trade balance decreased by almost 5 times compared to 2014, which can explain the strengthening of the ruble over the last six months.
For oil, the situation is not as obvious as the budget would like. Despite OPEC’s agreement to reduce production levels, the likelihood of a fall in prices for “black gold” is still high, so support for the ruble on this side is also in question.
As for our forecasts for the dollar and euro exchange rates during December, we expect a slight devaluation of the ruble against the dollar and virtually no serious movements against the euro. On international markets, quotes between the euro and the dollar are approaching almost parity, so soon the dollar and the euro will be sold at the same price relative to the ruble.
The upward trend in the dollar against the ruble, which began on October 25, will continue, but we can hardly expect a sharp upward movement. The growth will be smooth, and the maximum prices for the dollar, in our opinion, are close to 70-72 rubles, around which we will see a meeting of the two most popular foreign currencies in Russia.
Artem Deev, leading analyst at AMarkets
The dynamics of the Russian currency exchange rate demonstrated in recent weeks clearly indicate that oil remains the key dominant factor in the behavior of the ruble. Expectations that OPEC will keep production in the range of 32.5-33 million barrels per day support market optimism that the hydrocarbon market will restore balance between supply and demand. However, not everything is rosy. Within the cartel, there are obvious disagreements regarding restrictive quotas, which must be observed from January 1, 2017. Considering that production needs to be reduced by at least 1.3 million, serious difficulties may arise with the actual implementation of the plan, especially in Iran, Iraq, Libya and Nigeria . In other words, there is also a skeptical position on the market that the terms of the deal reached will not be observed at all, which means that the current increase in oil prices is only a primary reaction to the empty verbal rhetoric of OPEC. You won't be able to grow on this for long.
I believe that a more or less meaningful position regarding the still unresolved problem of overproduction in the hydrocarbon market will appear in the middle of this month. If such a scenario occurs, Brent oil may end up much lower than $50 per barrel, creating all the conditions for a consistent devaluation of the ruble above 66.00 per dollar.
Irina Rogova, analyst at Forex Club Group
One of the key risk factors for the ruble in December will, of course, be the meeting of the US Federal Reserve, which will be held on the 13th-14th. The fact is that the American regulator is expected to raise the rate. The probability of such an outcome is now estimated to be above 90%. Such an outcome will support the dollar across the entire market spectrum. In addition, the Fed's tightening of monetary policy will not benefit risky assets. Another potentially negative factor for the Russian currency is geopolitical tensions. Despite the fact that in the United States the president was elected Trump, while the West is not ready for a “warming” of relations with the Russian Federation.
As for the December meeting of the Bank of Russia, it will not have much impact on the ruble, since the head of the Russian regulator previously made it quite clear that another rate reduction (let me remind you, it is now at the level of 10%) should not be expected until 2017.
Most likely, in the first half of the month, the Russian currency will move in tandem with the dollar to the area of 62-62.6. But closer to its end, it may again return above the level of 65 rubles per dollar.
Paired with the euro, the ruble may renew recent highs. The euro-ruble pair may fall to around 67. The fact is that the euro now looks significantly weaker than the dollar amid the difference in expectations for monetary policy: the Fed is expected to tighten, but additional stimulus is not ruled out from the ECB. But by the end of the year, the euro/ruble may also rise slightly - to the area of 69.30-69.50.
The ruble exchange rate forecast for December 2016 allows for further strengthening of the Russian currency. At the same time, much will depend on the dynamics of prices for “black gold” and the future privatization of energy giants - Rosneft and Bashneft.
As a result, analysts do not rule out a new period of volatility in the foreign exchange market.
Ruble: course for strengthening
The rise in oil prices helped the ruble regain lost ground. Quotes of “black gold” have reached their maximum values this year, which is associated with the expected reduction in oil production. Exporters were able to overcome existing contradictions and, for the first time in a long period of time, agreed on the conditions for stabilizing the level of raw material production.
In such conditions, the ruble has every prospect of strengthening to 60-61 rubles/dollar, APECON analysts believe. External factors are shaping up quite optimistically for the Russian economy, and the presence of reserves helps resolve the issue of the budget deficit.
Representatives of the banking sector are also optimistic about the prospects for the Russian currency. The peak of the crisis is behind us, which rules out new shocks for the domestic currency. At the same time, participants in the foreign exchange market managed to adapt to new realities. After a long period of economic decline, domestic GDP is returning to positive dynamics, which also contributes to the restoration of the value of the ruble.
Experts note several factors that may prevent the dollar from further depreciating. Short-term instability in the foreign exchange market may be associated with the expected privatization of Rosneft. In addition, there remains the possibility of expanded sanctions from Western countries.
Maintaining the status quo or weakening
The sale of the state's stake in Rosneft may prevent the strengthening of the ruble, Raiffeisenbank analysts believe. This scenario will become possible if the company independently buys back its own shares. As a result, there will be a shortage of foreign exchange liquidity, which will lead to a weakening of the ruble. However, fluctuations in the foreign exchange market will only be observed in the short term, analysts emphasize.
In turn, the head of the energy giant, Igor Sechin, excludes the impact of privatization on the foreign exchange market. Also, currency quotes will not change if Rosneft buys a stake in Bashneft.
Another factor that could destabilize the foreign exchange market is the growth of geopolitical tensions, experts say. Instead of the expected lifting of sanctions, the United States and representatives of the European Union are considering the possibility of introducing additional restrictions against the Russian Federation. New Western sanctions are related to developments in Syria. An additional factor of uncertainty remains the development of the conflict in eastern Ukraine.
A moderate weakening of the ruble could have positive consequences for the economy, experts emphasize. As a result, the government will be able to reduce the budget deficit, and Russian companies will gain an additional competitive advantage.
Risks of a strong ruble
Further strengthening of the ruble could become a problem for the domestic budget, experts say. As a result, revenues from energy exports decrease, which leads to an increase in the budget deficit. This year, resources from the Reserve Fund were used to finance expenditures, but by the end of the year this source will be practically exhausted.
In addition, a strong ruble affects the competitive positions of domestic exporters. Russian companies are deprived of a significant support factor, which will hinder the restoration of economic growth.
In such conditions, a controlled weakening of the Russian currency can eliminate most of the officials’ problems, experts say. At the same time, the dollar exchange rate by the end of the year will depend on the cost of “black gold”:
- A further increase in oil prices to $55 per barrel. will lead to a weakening of the ruble to 63-65 rubles/dollar.
- If oil prices stabilize in the range of 50-55 dollars per barrel, then the value of the dollar will reach 68 rubles.
- Reducing the cost of oil to 45-50 dollars per barrel. will result in an increase in the dollar exchange rate to 70 rubles/dollar.
In December 2016, the Russian currency will continue to strengthen, which confirms the optimistic forecast for the ruble exchange rate, and will reach 60-61 rubles/dollar.
Forecasts for the end of 2016, which were given by economists before and after the August fall of the ruble, differ significantly. Previously, leading experts in Russia and many Western countries believed that the ratio of 60 rubles/dollar was the most likely.
But after the collapse of the yuan, the fall in the cost of a barrel of oil, and the return to the Iranian market, it is difficult to say how much the dollar will cost against the ruble in December. Its cost is determined depending on many factors. But most of all it is affected by the price of oil. Analysts are afraid to make accurate assumptions. They say that one should not exclude a situation in which it could depreciate to $30. per barrel. But at the same time, they say that its cost may increase to 65 USD. And this could lead to the strengthening of the ruble and maintaining the exchange rate at the level of 50 rubles/dollar.
The last scenario, according to many, is quite likely. After all, the August reduction in price will lead to an increase in demand for this resource, and against the backdrop of the stock market collapse of the American exchange, to an increase in the cost of oil. But analysts do not give accurate forecasts as to what the exchange rate will be, because in the current situation it is impossible to make long-term assumptions. No one has a clear understanding of what could happen in the oil market even over the next one or two months.
A good forecast for the dollar exchange rate for December 2016 in Russia is provided by Raiffeisen specialists. They believe that a ratio of 65 rubles/dollar will be quite likely. Sberbank CIB specialists also give this forecast.
Economists from the Financial Group BCS are more optimistic. They make the most favorable assumptions, believing that a dollar can be purchased for 50 rubles. But only a few support this position.
Many expect the dollar to fall by the end of the year and the associated rise in oil prices. If such a forecast comes true, then the domestic currency will regain its position and remain at the level of 60.5-62 rubles/dollar. But these expectations will be justified if oil prices rise to at least $50. Also, the possibility of this scenario developing is evidenced by the fact that the New York and Chinese stock markets are in an unstable situation at the end of summer.
Some brokers take the position that in December 2016 the ratio may be around 70-88 rubles/dollar. It would be possible to make more accurate forecasts if the price of oil is known. The optimistic forecast assumes that oil will cost $50 per barrel, while the pessimistic forecast assumes it will fall below $40.
Analysts at Alfa Capital say that if the latest news does not change and the price of oil remains at the August level, then the year can be closed with a rate not exceeding 68 rubles/dollar.
In general, forecasts for December cannot be called pessimistic. Most experts believe that the dollar exchange rate will no longer be in a fever, and it will consolidate its position in the range between 60 and 70 rubles. Of course, these forecasts will be valid if oil does not fall in price to $30 per barrel by December. You can also hope for an improvement in the situation if the government decides to support the ruble. In this case, even a drop in oil will not have too much impact. The Federation's gold and foreign exchange reserves, according to analysts, should be sufficient to prevent destabilization of the situation.
The Bank of Russia lowered the official rates of major world currencies on Thursday, December 15. The dollar fell by 26 kopecks to 60.80 rubles, the euro fell by 22 kopecks to 64.75 rubles.
The cost of the bi-currency basket (0.55 dollars and 0.45 euros) as of Thursday is 62.5838 rubles.
Meanwhile, world oil prices started the day with growth. This is evidenced by electronic trading data as of 7.33 Thursday.
Thus, on the New York Mercantile Exchange, futures for WTI oil for delivery in January increased by 0.02% to $52.1 per barrel. February futures for Brent oil on the London ICE Futures exchange rose in price by 0.22% to $54.02 per barrel.
Dollar and euro exchange rate forecast, expert opinions:
On Thursday evening, the most anticipated event by the financial market occurred - the US Federal Reserve decided to increase the base rate to 0.5-0.75%. Today, the markets will sum up the results of the Federal Reserve meeting, and as they realize what happened, the dollar will begin to strengthen against all currencies, including the ruble. However, experts reassure that this decision has already been laid down by the markets and will not lead to sharp fluctuations in exchange rates.
Not everything is rosy in the commodity segment either. After the decision of OPEC and oil exporting countries outside the cartel, which led to an increase in prices for “black gold,” the shale industry in the United States began to “raise its head.” Against this background, the market is beginning to react sharply to American data on the growth in the number of drilling rigs, which the oil service company Baker Hughes traditionally presents on Fridays. If data this week shows growth, this will put pressure on Brent and, accordingly, have a negative impact on the ruble exchange rate at the beginning of next week.
Experts interviewed believe that the Russian currency currently looks overvalued, both against the backdrop of the dynamics of similar currencies and in relation to the level of oil prices. There may be several reasons for this: the conversion of currency received during the privatization of Rosneft, the traditional December demand for currency among the population and the preparation of exporters for the December tax period. Against this background, experts predict that in the coming week the ruble will periodically attempt to grow, but in general the trading range will be at the levels of 61.5-62.50 rubles per dollar.
Today I decided to tell you about the latest forecast for the dollar exchange rate for December 2016. As always, experts have different points of view, but they all agree on one thing: the ruble exchange rate in December depends on the behavior of the price of black gold.
At the moment, the dollar costs 65 rubles. Some experts say that the ruble will strengthen in December, while others will depreciate. But due to the fact that the ruble has been slowly depreciating over the past 2 weeks, we can confidently say that this trend will continue in the future. Many experts say that November and December are the last months of calm, when the ruble will gradually depreciate.
It is surprising that at the moment there is an increase in the price of oil on the market, which, in turn, should stop the depreciation of the ruble. Raiffeisenbank experts are confident that the ruble will not strengthen due to the sale of the state stake in Rosneft. Such development is only possible if the company itself buys back its shares. As a result, there will be a shortage of foreign exchange liquidity, which will lead to a devaluation of the ruble.
Dollar exchange rate forecast for December 2016
Experts assure that in December the dollar/ruble pair will experience short-term fluctuations. The head of Rosneft, Igor Sechin, said that privatization will not affect the foreign exchange market.
Another factor that could lead to destabilization in the market is an increase in geopolitical tensions. Instead of lifting existing sanctions, the US and EU countries are planning to introduce new sanctions. New sanctions will arise as a result of the conflict in Syria. Another factor that will not allow the currency to strengthen is the unresolved conflict in Ukraine.
Experts are confident that the gradual weakening of the ruble will only have a positive effect on the state’s economy. As a result of the depreciation of the currency, the country reduces the budget deficit, and Russian entrepreneurs gain a competitive advantage.
In general, almost all dollar exchange rate forecasts for December 2016 are pessimistic. The price of the American currency in the last month of the year will fluctuate in the range of 62-68 rubles.
This forecast for the dollar exchange rate for December 2017 will come true only if the price of oil does not fall to 30. Until November 15, the cost of black gold only increased - to 45.42 dollars per barrel.
If the cost of black gold reaches 50, then the ruble may reach 62. At the moment, the rise in the cost of oil is due to the efforts of OPEC countries, which are aimed at reducing production. Today, Qatar, Venezuela and Algeria are looking for ways to regulate contradictions between large oil-producing countries. Earlier, the Minister of Economy of Saudi Arabia called on all OPEC members to come to a common denominator to reduce oil production. The next meeting of the cartel is scheduled for November 30, 2016.
Fresh forecast for the euro exchange rate for December 2016
There is still instability in the EU. Eurozone countries still cannot cope with the consequences of Brexit. The euro/dollar pair continues a downward trend, which will last until the end of 2016.
Forecasts for the euro exchange rate for December 2016 are similar in that this month the trend towards a depreciation of the euro will continue. At the moment the EU has a lot of problems, including emigrants. To improve the current situation, the ECB kept the interest rate at a record low and also kept the quantitative easing program in operation.
At the moment, European countries are not going through the best of times. Inflation at the end of the current year is 0.2%, which is 10 times lower than the target value of two percent. GDP growth over the next three years will remain at 1.6%, which also scares many experts. The threat of deflation is prompting the ECB to continue measures to improve the economy. The bank's discount rate remains low, but the deposit rate is minus 4%. A negative rate has a negative impact on the banking industry, as a result of which many credit institutions are not in the most favorable position. Deutsche Bank is also in a deplorable state, and this is already a threat to the entire stability of the system. Experienced experts say that huge sums may soon be required to support the financial sector, which will negatively impact the economy.
The EU is also suffering because of the UK's exit, as well as because of the huge number of emigrants, which only increases the divisions between EU members. Experts claim that after the UK’s final exit from the EU, trade volumes will sharply decrease. This development threatens the continued existence of the European Union, which, of course, affects the mood of investors.
The latest forecast for the euro exchange rate for December 2016 states that the euro will continue to depreciate in the future. According to APECON, in December the euro will cost 64-68 rubles. If the price of oil also increases in the future, then the cost of the euro in December could be 64 rubles.
Despite numerous attempts by APECON to reduce oil production, there is still a lot of black gold on the market. In addition, the previously reached agreement between major oil-producing countries is under great threat due to the position of Iran and Iraq. Experienced analysts do not rule out another collapse in oil prices, which, of course, will deal a blow to the Russian economy and lead to a devaluation of the national currency.
In December 2016, the euro exchange rate against all world currencies will decline. But what will happen to our currency at the end of the year depends on the future price of oil. The latest forecast for the euro exchange rate for December 2016 states that in December the euro will cost 62-68 rubles.
This article is for informational purposes only and is not a guide to action.
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