The ruble is in the red in the face of low currency supply and despite positive factors

MOSCOW, Jul 19 (Reuters) – The ruble remains moderately negative until Wednesday evening, despite positive factors and market expectations for its strengthening, and flow imbalances could work against it again – volatile local foreign exchange demand amid weak supply of foreign currency in the domestic market today.

At 17:20 Moscow time, the dollar/ruble was at 91.28 with tomorrow’s calculations, and the ruble was down 0.4%. From the beginning of the day, the trading range was 90.75-91.42, the transaction volume from 7 am was USD 630 million.

At the time, the euro/ruble pair was trading at 102.29, and here the ruble is down a third of a percent to its worst value since March 28, 2022, 102.74 in the morning.

In tandem with the yuan, the ruble loses less than a tenth of a percent, the quotations approach 12.63 and here it is supported by the weakening of the Chinese currency in foreign markets.

At the same time, the ruble is still affected by relatively high oil prices, the factor of upcoming tax payments and expectations of Friday’s increase in the main interest rate by the Bank of Russia.

By the end of next week, Russian exporters can increase sales of export earnings under the single tax payment (July 28), which includes MET, under which commodity companies usually increase sales of export earnings.

“It can be assumed that the ruble will seek to strengthen due to preparations for tax payments,” said Andrey Kochetkov of Otkritie Investments.

At the same time, local markets are also waiting for an increase in the key CBR rate following Friday’s results of the Board of Directors of the Bank of Russia against the background of inflation risk and rising inflation expectations of the population, and some analysts allow a non-standard increase by a significant amount that should formally support the national currency.

The day before, the price of the base oil rose by almost 1.5 percent, and since the beginning of Wednesday, the price of a barrel of North Sea Brent blend has increased by the same amount and is estimated at USD 80.80.

Indicative quotations for Russia’s Ural export mix remain well above the Western $60/bbl price range today .

Oil prices are rising amid promises by the Chinese government to stimulate slower economic growth and expectations that the Fed’s tightening cycle will soon end.

Domestic demand for foreign currencies is shaped mainly by Russian importers in the context of recovery in consumer demand.

“For now, the ruble may stay at current levels, but by the end of the week, the USD/RUB exchange rate may fall to around 90.00,” Bank St. St. Petersburg. (Moscow office)