The ruble weakens against the backdrop of cheap oil and risk minimization until the weekend

MOSCOW, March 17 (Reuters) – The ruble weakens until Friday night, and against it – oil has depreciated significantly in recent days and continues to fall, as well as local risk minimization over the weekend, both due to high geopolitical uncertainty and lingering threat turmoil in external markets.

At the same time, the Russian currency practically did not react to the expected decision of the central bank to keep the interest rate and to the “hawkish text” of the accompanying communiqué, which also turned out to be in line with the forecasts.

At 16.10 Moscow time, the dollar/ruble exchange rate was close to 76.93 in the “for tomorrow” calculation, and the ruble is losing 0.7%.

The exchange rate of the euro/ruble pair was then 81.60, and here the ruble weakens by half a percent.

Combined with the yuan, the ruble is now down three-quarters of a percent and is trading close to 11.17.

In overseas markets, oil prices returned to the lows after trying to rebound in the first half of trading.

North Sea Brent is now down 1.4% at $73.60 a barrel, fell below $72 on Wednesday and Thursday for the first time since December 2021, and is down 11% in just one week on fears o demand in the face of a possible crisis in the global economy caused by the instability of the banking sector.

Russia’s Urals export, supplied to Europe’s north-west region, is now trading at $46.15 a barrel and is poised to near its lowest levels since the beginning of this year by the end of the week .

The main factor of pressure on the ruble exchange rate is the threat of a reduced inflow of foreign currency inflows for exported oil, combined with persistent geopolitical threats and the negative impact of the high budget deficit of the Russian Federation.

This week, the ruble on Thursday reached new lows since last April, 77.49 to the dollar, 82.62 to the euro and 11.21 to the yuan, but at the same time, market participants are assuming that yesterday’s short-term collapse of the ruble during the session was mainly speculative. combining this with the desire to fix the desired exchange rate in anticipation of the expiration of futures contracts on the Moscow Stock Exchange.

The Central Bank of Russia did not change the key interest rate today, keeping it at 7.50% from September 2022, as the balance of pro-inflationary risks has not changed much since the previous meeting.

At the same time, the regulator said that in the event of an additional increase in the budget deficit, the pro-inflationary risk would increase and it may be necessary to tighten the monetary policy in order to secure the future in 2024.

Now the focus is on the Fed meeting, the results of which will be announced on March 22.

Some investors and analysts are hoping the Fed can slow down aggressive rate hikes to ease the strain on the financial sector.

(Moscow office)