The price of oil fell below $ 47, the dollar rose above 67,5 rubles, the dependence of the ruble against oil deprives the Central Bank of maneuver
The European currency at the auction on the Moscow stock exchange rose above $ 75 rubles. For one Euro give 75,31 ruble, 1.26 months the closing level of the previous trading session.
The exchange rate of the dollar also rose. American currency is at the exchange 67,5 of the ruble, rising from the opening of trading at 89 cents.
The ruble’s decline accelerated sharply in the second half of July 2015. For the month the dollar rose against the ruble by 18.6%, the Euro by 22%. Analysts believe the main reason for the devaluation of the ruble, the decline in world oil prices.
The price of oil on Thursday, August 20, trading near six-year low, reports “Prime”. The cost of the October futures for North sea Brent blend had dropped to 46,89 USD per barrel, WTI fell to 40,96 dollars per barrel.
Before it became known that commercial oil reserves in the U.S. for the week ended August 14, unexpectedly rose by 2.6 million barrels, or 0.6%, to 456,2 million barrels.
In the analysts ‘ forecasts are pessimistic. “I don’t see how the current situation with reserves at 2.5 billion barrels may be of any kind, except for “bear”, – quotes The Financial Times the Hamza Khan, head of commodity strategy ING Bank. Citi’s experts say that the drop in prices to $ 32 per barrel, that is, to the level, when the crisis of 2008 was in full swing, “quite real”.
The most negative Outlook David Kotok of Cumberland Advisors, a 72-year-old investor and expert on financial and economic issues: “there is No reason to believe that we have reached the bottom. Oil could easily drop to 20 dollars per barrel, and up to 15″, quoted by CNN Money.
Bank of America has lowered its forecast for the ruble at the end of 2015
The U.S. investment Bank Bank of America Merrill Lynch (BofA) has lowered its forecast for the ruble to 60 rubles per dollar by the end of 2015, said the Agency Bloomberg. At the end of 2016 BofA predicts the dollar at the level of 61 rubles, the prognosis is worsened in the conditions of falling oil prices and currencies of developing countries.
Yesterday the price of Brent oil slumped after reports of increased U.S. inventories. So, commercial oil reserves in the U.S. increased during the week from August 10 to 14 in 2,62 million barrels to 456,2 million barrels. The analysts surveyed by Bloomberg expected the reduction of inventories by 0.82 million barrels. According to the median forecast of 46 analysts surveyed by the Agency, the dollar in the fourth quarter of 2015 will be at the level of 63,33 of the ruble.
Inefficient economy has become hostage to oil prices
Meanwhile, the dollar came close to the level of 67 rubles, the second wave of devaluation is not a bit slower than the first, the end of 2014. The main fundamental factor that weakens the ruble, oil prices – continue “to search for a bottom,” writes in the”Gazette” Sergey Romanchuk, President of ACI Russia – The Financial Markets Association.
More recently, the situation favored Russia: the ruble has appreciated so much that the Central Bank announced a program of purchases of foreign currency to replenish gold and currency reserves (GCR), he recalls. Monetary authorities seemed that the amplitude of market fluctuations should eventually fade away. The President even praised the head of the Central Bank for the “strengthening of the ruble.”
However, the facts say otherwise, the expert specifies. The weakening of the ruble was caused by the fundamental factors have not gone away: the fall in oil prices, external debt, capital outflows due to deterioration in the business climate, sanctions, increase the risks of the Russian banking system.
The expert believes the likely price targets at the level of 80 rubles per dollar when quite likely the $ 40 per barrel and approximately 90 rubles at 35 dollars per barrel. Later or earlier, this is likely to happen: the effectiveness of the use of shale deposits is growing unexpectedly fast pace, and the market Iranian oil will further increase its offer.
Time plays against today’s Russia, frozen in its structural inefficiency of the economy has become hostage to oil prices, and get her out of this state can only be a true shock, breaking the whole system, he writes.
The effect of the fall of the ruble inflation (by increasing the cost of imported goods in rubles) exceeded expectations and adds to inflation at about 1.75% for every 10% weakening of the Russian currency. The structure of the economy has not changed: the import though has decreased, but the substitution made in Russia products has not occurred.
To combat inflation and stabilize the exchange rate in poor, but the likely scenario of continued fall of oil prices, the Central Bank is unlikely to be able to avoid another rate increase, according to the expert, and the economy as a result will accelerate the fall. The press has leaked information that the leadership of the Central Bank strengthened the position of the supporters of “restrictive measures” on capital flows.
The introduction of measures to limit capital, is likely to hasten the collapse of the current political-economic model. Addressing problems in the short term, it will eventually kill the investment climate in Russia for the long term, experts predict.