Peter, when on the eve of August, we discussed the prospects of the ruble this month, you call the ceiling the strengthening of the dollar – 74 of the ruble. Do not want to adjust your prediction?
Peter Pushkarev: No. When we discussed the traditionally alarming for the ruble the reputation of this summer months, I really assumed the corridor with the guide 67 and 74 rubles per dollar. And with high chances for the pair dollar/ruble turn to touch each of these boundaries.
In the first two weeks of August the dollar and started to thoroughly test the strength of the vicinities of the upper bound. However, above the level 74 of the ruble, the U.S. currency has been only once, but the quotations of the ruble higher than 73.5 tested three times.
But every time the dollar was down again closer to 72.5 ruble. Thus, the natural ceiling for the dollar is proving its resilience to speculative attacks.
What is the currency in this situation feels particularly confident? The ruble? Euro? Yuan?
Peter Pushkarev: The successful resistance of the ruble is connected with the continuing and in August quite conscious outflow of international capital from the dollar pillows reserves, including debt securities of the U.S. Treasury.
But they go in the assets from Europe, Australia, Canada and probably China. Confirmation of these trends are clearly visible in the behavior increasing in price counterparts of the us dollar, among which stands out brighter now the dynamics on the Euro and the yuan.
However, the exchange rate risk to keep money in Chinese currency or in Renminbi to conduct the calculations are still reviewed by many as high. The reason for that and then flashing the contradictions between China and the United States. And not only trade. But the single European currency of such claims from a global pool of investors does not occur.
What is the Euro so sweet to investors?
Peter Pushkarev: of Course, Europe has badly diluted its money supply work of “printing press”, but still sees the EU region.
Terms of new external borrowing at 750 billion euros EU leaders discussed the five days. And for a very long time verified the mechanisms of distribution of financial responsibility for the loan between national governments.
And the United States at this time, juggling numbers in two or three “extra” trillion, which they are, almost jokingly, ready to print, taking new stimulus packages. And the US Treasury under the direction of Steve Mnuchin ready for the fall to accommodate the new external loans worth another couple of trillion.
Investors scary, in fact, postponed devaluation of the dollar, which is a year end thing, when the dust settles. And they prefer a more disciplined currency, the Euro.
in addition, stock markets around the world rely on the appearance of the WACmedicine that will bring victory over the virus. However, the global economy is rapidly recovering, and there is no need to look for a safe-haven asset. Therefore, there is no reason to buy low-yielding US treasuries. That increases the demand for new bonds of the Commission issued under the guarantee of the EU. And the Euro/dollar remained stable in the hallway of 1.17 to 1.19, with an eye to 1.20 and above.
And to what heights it will reach the Euro in tandem with the ruble?
Peter Pushkarev: the Euro/rouble hardly will fall below $ 85. And, most likely, will gradually reach 90 rubles.
a Landmark shift in the savings calculations towards the Euro confirm that the Central Bank of Russia made the right bet at the provisions in valuing the assets: gold in euros and not in dollars. And it’s not only in politics and sanctions. But in the commercial following the global trend that is only gaining momentum.
trend-rejection of the dollar?
Peter Pushkarev: a Complete rejection of the dollar impractical. For raw materials and many other assets the world prefers to pay in dollars. But to save dollars long-term more profitable.
Hence the increase in the share of the Euro in trade with the EU countries – up to 43 percent compared to 38 percent at the end of 2019. And gradual refusal of calculations in dollars with China, but again – more in favor of the Euro than the yuan.
And still have the ruble chance to oust dollar?
Peter Pushkarev: a dampening effect on the dollar is able to provide incentives in the form of new dollar injection, if they will host the Congress of the United States. And this can happen in the coming Monday and Tuesday.
It may eventually have a positive impact on the ruble. But probably not in August and later. While the ruble strengthened to prevent inadequate cash flow to all developing markets, including South Africa, India and Brazil.
To change the sentiment on the ruble requires that the dollar first fell sharply outside of Russia. And only in this case it may make a wave to 70 rubles. And the rest will complete inertia. But now likely only by mid-autumn. In the meantime, the corridor 72-74 of the ruble to the dollar may persist. And if slightly enlarged, only for a short time.
the Fall of the Turkish Lira is very hurt by the ruble?
Peter Pushkarev: a Dangerous example of the Turkish Lira valid on the ruble sobering.
the Problems of Turkey, as experience has shown, 2018, may be greatly exaggerated. And damage to the economy from the coronavirus, the budget deficit, with a lack of national reserves. However, at that time, the Turkish currency has managed to derail half, before everything calmed down.
and now, when the Turkish currency has closed at a new historic bottom, the speculative elite there is a powerful temptation of the linemeet with the Turkish Central Bank on. And derail lyre to a more deep bottom, say, move the rate up to 8 lire per dollar.
Directly at the problem of the Lira is not an option for South Africa’s economy or financial system of Russia. But the habit of many investors to consider the dynamics of the currencies of developing countries in a bundle, in the logic of the total inertia, in the case of a steep dive Lira will force them to postpone purchases and Russian financial assets.
