The chief economist of Alfa Bank named two reasons for the sharp fall of the ruble

“According to traders’ estimates, after 2022 this channel accounted for just over half of the foreign exchange earnings of the Russian market. The sanctions against Gazprombank now force exporters to significantly change their logistics. <...> For exporters this is an immediate shock,” said the expert.

According to Orlova, the currency will probably continue to reach Russia through other banks, but its supply has decreased and demand from companies is growing. “Of course, when the exchange rate weakens, many importers quickly begin to purchase foreign currency. Especially on the eve of the New Year, when deliveries need to be planned. This determines such a strong movement. [курса]that we are observing,” explained the economist.

It is “very difficult” to predict how long the trend will last, as the course is largely dictated by “geopolitical alignment,” Orlova said. “A lot will depend on the overall negotiation process, let’s call it that,” he added.

The expert assessed that the probability of the ruble falling to a new record is not the highest, but noted that there are almost no actors left in the market who could stop the growth of currencies. “Before 2022, there were companies that had large deposits in foreign currency. During periods of weakening of the exchange rate, there were always players who, during this weakening, preferred to sell currencies and invest in rubles. Now there are very few such actors in the system,” Orlova noted.

In his opinion, the situation with the ruble will inevitably affect the decision of the Bank of Russia on the key exchange rate on December 20, since the weakening of the national currency could further stimulate inflation. “The rate hike at the December meeting now looks more significant than seen so far. If before the market looked at 23%, now, of course, the market will think about 24% or 25% annually,” emphasized the chief economist of Alfa Bank.

On Wednesday, November 27, the dollar exchange rate on the Forex currency market and in the over-the-counter market approached 115 rubles, the euro was trading above 120 rubles. At the same time, at the beginning of the week the American currency was close to 100 rubles, the European currency was below 110 rubles.

In this context, the Bank of Russia announced that until the end of 2024 it will not purchase foreign currency on the domestic market as part of the usual operations of the Ministry of Finance. “The decision was made to reduce the volatility of financial markets,” said a representative of the regulator. At the same time, the Central Bank will continue currency sales operations “related to the replenishment and use of funds from the National Welfare Fund, including taking into account all operations carried out with the funds of the fund in 2023, in the amount of 8 .4 billion rubles per day,” he added.