The Central Bank of Russia lowered its key rate to 17% amid a change in the balance of risks of accelerating growth in consumer prices, on the one hand, and the decline in economic activity and risks to financial stability, on the other.
Will the dollar rate reach ₽70 or wait for ₽95? Photo: Yandex Images ”
The supply of currency still exceeds the demand, and the dollar exchange rate may come close to 70 rubles in the next few days. However, a more significant strengthening of the ruble will have a negative impact on the budget and the income of exporters. Under these conditions, the Bank of Russia may more actively ease restrictions on capital flows: for example, the commission on the purchase of dollars, euros and pounds may be canceled, which will support the demand for currency,” Sberbank analysts wrote.
Will the dollar exchange rate reach ₽70?
So, we have come to what is obvious for everyone: the Bank of Russia should choose the level above which it will not let the ruble go. We have to assume that since 75 rubles per dollar is not a red line for it, maybe 70?
It is possible, but not certain, says Dmitry Polin, an analyst at the ProFinance portal.
“I could say that the Central Bank drove the dollar here to replenish currency reserves, but why, if non-cash money can only be kept as an entry in the passive part of the Federal Reserve’s balance sheet anyway.
To imagine bringing several billion in paper money into the country is unrealistic. To buy currency from authorized banks, to make some semblance of a gold reserve in private accounts, but where is the guarantee that this money will not be seized tomorrow as well. No, rather, it is just temporary market distortions, which happened by chance.
There is hope in this case that the Central Bank will start to form some kind of channel, say 75-95, by lifting restrictions, which will have a beneficial effect on inflation and devaluation expectations and inflation itself (currently +16.5 y/y).
Imported inflation in Russia was a strong factor in the final CPI. Yes, and the panic of the population was fueled by the exchange rate, judging by the short experience of building capitalism in the country.”
The next meeting to consider the rate level is scheduled for April 29, 2022.