Overview: What determines the growth or decline of the ruble

Image: Waltie | CC BY 2.0

In the past few months, the ruble against the dollar is fairly stable. At the same time, even in such a situation, there are fluctuations - for example, in April the rate grew, and in May for the first time in a long time, it declined. Why it happens? I gathered in one material the factors that influence the Russian currency both in plus and in minus.
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Note : The purpose of the material is not to give a hint on how to make extra money on fluctuations, but rather to help avoid unnecessary losses due to unexpected fluctuations that could be easily foreseen.

Ruble depreciation factors

Let's talk about what can affect the steady decline in the value of the national currency of Russia. There are several such factors, each of them occurs annually.

Decrease in foreign exchange export earnings

According to open statistics, from the beginning of the second to the end of the third quarter, it is traditionally possible to observe a decrease in the export of energy resources. This is logical - in Europe, mainly the buyers of this Russian product, it becomes warm.

Here is how financial analysts describe the impact of this factor:

"The slowdown in the export earnings inflow leads to a decrease in the current account from the export of goods over this period, which, in turn, causes a slowdown in the growth of funds on correspondent accounts of Russian banks and corporate currency deposits and, as a result, affects short-term currency liquidity."

Dividend payout season

Traditionally, at the end of spring-summer, the dividend payout season of Russian companies falls. In the world ranking in terms of payments in 2018, Russia entered the top ten, equaling with Switzerland. At the same time in the ranking for emerging markets, our country was second only to China, remaining in second place.

According to statistics, up to 77% of dividend payments are made by Russian exporting companies. Most payments are made in June, approximately equally divided by July and August. For the ruble, this has a negative effect, because investors convert rubles received as dividends into dollars.

Ministry of Finance Activity

It is no secret that the authorities can somehow influence the course of the Russian currency, for example, with the help of the so-called interventions, that is, purchases of currency in the domestic market. In May of this year, the volume of such purchases amounted to 300.5 billion rubles. The more currency a ruble buys a department, the more its rate increases, and the price of a ruble decreases.

It is clear that this factor may also influence the ruble strengthening, however, since this spring the activity of the Ministry of Finance became a factor of its weakening, we will put this item in the section of fall factors.

What supports the ruble exchange rate

Now let's talk about what factors positively influence the price of the Russian currency. There are several of them too.

Taxable period

One of the important factors that contribute to the strengthening of the ruble is the tax period when companies must pay taxes. For exporters, this means having to sell part of their currency earnings in order to receive rubles and pay taxes.

External factors

In addition to local, there are external factors in favor of strengthening the ruble. The undoubted factor in reducing or strengthening the ruble price has always been the price of oil. Today they remain at a fairly high level, and this supports the price of the ruble.



Data: RBC

In addition, traditionally, the Russian currency reacts to foreign policy events, such as the introduction or postponement of regular sanctions.

Also, according to analysts, there is such a factor as global demand for risky assets - they traditionally include investments in the economies of developing countries. When traditional markets do not grow fast, investors become more interesting riskier investments. At such moments, the desire to earn can outweigh the other disadvantages, such as the lack of capital, etc.

A retrospective analysis suggests that all the factors that we mentioned have an impact on the ruble exchange rate in certain periods.



A source

January and August are the worst months for the ruble

Traditionally, it is in these two months that the ruble shows the worst results. At the end of winter, holidays in the country become an additional negative factor for the ruble - many people plan holidays abroad and buy currency. In addition, all negative factors often come together in August, even if it is possible to avoid external negative impacts.