As of today, the average exchange rate of the ruble is 8.4 tenge on KASE. Kursiv.media asked experts why the currency is getting appreciated against the tenge despite the international sanctions imposed on Russia by Western countries.
According to Valeriy Polkhovsky, senior analyst in Forex Club, there are two reasons the exchange rate of the tenge is weak: global oil price is still plunging and the ruble is getting stronger against the USD and euro within Russia.
Analysts from Jusan Analytics agree. They believe that the appreciation of the ruble against the tenge is based on a super appreciation of the ruble against all global currencies.
Alexander Potavin from Finam says that the tenge is expected to be traded at 7.5-8 tenge ($0.016-0.018) per ruble this month.
However, Polkhovsky doesn’t rule out that the ruble may be traded at 10 tenge or even more in July. “Nobody can say that this is impossible. If the ruble continues to appreciate against the USD and euro while the oil prices go beyond $100 per barrel of Brent, this probably will happen,” the analyst added. This forecast will depend on changes in the geopolitical situation and sanctions (Russian authorities say that the strong ruble is not good for the economy).
“The current strength of the ruble is based on high oil prices. If oil prices continue to grow while Russian imports are stuck at the minimum figures, the ruble will get stronger and stronger,” experts from Jusan Analytics said.
Ansar Abuev from Freedom Finance believes that further appreciation of the ruble isn’t good for anyone. As soon as the Russian authorities soften foreign currency control, the ruble will start to depreciate.
Moreover, the real exchange rate between the ruble and tenge is lower than on KASE. For example, the buy rate of the ruble in Almaty is 7.48 tenge; the sell rate is 7.87.
At the same time, the exchange rates of the American dollar and euro on the MOEX were lower, at 53 and 56 rubles respectively.
So far, the Russian currency is still appreciated against the USD and has already reached its heights since 2015, Ansar Abuev says. When Russian oil called the Urals has almost gotten the Iranian amount of export to China, this added fuel to that growth. It is expected that the Urals will reach the bar of 300,000 barrels per day this month, while Iran was forced to cut its supplies to 400,000 barrels. The seasonal fluctuations of the tenge’s exchange rate also affect the further appreciation of the ruble against the tenge, Abuev explained.
However, the strengthening of the ruble is grounded on the official ban on capital flow and doesn’t depend on foreign markets, Potavin noted.
The same idea was expressed by Madina Makhmetova from CAIFC Investment Group. She believes that the appreciation of the ruble is driven by both market factors (high oil prices and low imports) and non-market factors such as limited capital flow within Russia and interventions of the Bank of Russia.
“The Russian economy wouldn’t be happy with the ruble if it was too strong, even though Russian export is nominated in USD and euro. If the currency would continue to appreciate further, it will cause the fiscal deficit in Russia and limit the government’s ability to conduct monetary policy,” experts from Jusan Analytics said.
Another factor that drives the ruble to its height is the excessive supply of foreign currencies by exporters, says Bogdan Zvarich from Banki.ru. At the same time, importers and regular people show little interest in foreign currency.
“The foreign currency demand is currently based on small import transactions which are still possible amid the international sanctions. The government has almost killed the appetite of the population for foreign currencies as a tool to save money, Jusan Analytics experts said.
The exchange rate of the ruble is also affected by the fact that Russian banks charge their clients for keeping deposits if they are nominated in foreign currency. For many in Russia, this uncertainty is a solid reason to get rid of foreign currency.
Any future changes in the exchange rates will be dependent on the policy of the Bank of Russia. The regulator needs to keep the strengthening of the ruble under control by decreasing the base rate and applying the exchange rate targeting, experts from Jusan Analytics said.