Signs and superstitions 

Will there be a devaluation? Devaluation - what is it in simple words and what does it mean for your wallet? I must say, these concepts are completely different, so

The economic state of the country is of serious concern to every resident of the country, but now that the new year is approaching, the situation with the ruble has become of particular interest. Is there any hope for establishing some stability or should we expect greater difficulties? One of the especially discussed topics now is whether the ruble will devaluate in 2017 in Russia? This question can only be answered with assumptions.

Many are concerned about the state of the Russian economy; it is obvious that any changes that affect it in the coming year will affect all citizens and their well-being.

The most serious indicator of economic condition can be called the ratio of the Russian ruble to the US dollar. Based on what the ruble exchange rate may become in 2017, we can estimate the likelihood that devaluation will occur. In addition, there are still a large number of factors, external and internal, that can influence the situation in the country.

  • fall or rise in oil prices;
  • the impact of the situation that is developing in Ukraine;
  • economic sanctions;
  • outflow of funds outside the country.

Internal factors include:

  • changes in Federal Reserve rates;
  • unemployment;
  • inflation.

One significant factor is oil prices. According to experts, an increase in the price of oil can improve the situation with the ruble and strengthen the position of the Russian economy. Oil exports are a significant share of profits in Russia, but now only trends toward a drop in oil prices are noticeable. This situation continues to negatively affect the ruble.

Foreign sanctions also affect forecasts of whether there will be a devaluation of the ruble in 2017 in Russia. The introduction of such measures has already led to a drop in import and export turnover. Investments from other countries and sources of financing have decreased. Sanctions imposed by other countries, as well as Russia itself, have a negative impact on everyone, and yet they continue to be extended. If this situation does not change, we can expect a further fall in the ruble.

It is worth considering such an internal problem in Russia as unemployment. The increase in the number of unemployed, caused by the difficult situation in the country, in return complicates it even more. People who have lost the opportunity to work are not able to positively influence the economy, but in the current situation it is not possible to help everyone, which is reflected in the further fall of the ruble.

Forecasts for 2017

Now we can name three main options according to which the economic situation will develop in 2017:

One way to cope with the situation is to save significant money. Thanks to them, it is planned to reduce expenses by one trillion rubles during 2017. However, it is impossible to say exactly which areas will be most affected by the economy. Most likely, the greatest difficulties await the social sphere, including changes that will affect the current retirement age.

In addition, an emphasis on goods produced within the country will contribute to positive trends in the economy, and, in addition, will be beneficial to domestic producers. However, this means losses for those producers who depend on foreign raw materials or technologies.

In February, a “temporary budget rule” comes into force in Russia, which is considered by the Ministry of Finance as a solution to the problem of the budget deficit. The new monetary policy of the financial authorities assumes that the Central Bank, on behalf of the ministry, will regularly buy foreign currency on the Russian market in order to use oil revenues to replenish reserve funds. The volume of interventions will be equal to the amount received from the excess of actual oil prices over the budgeted $40 per barrel. Over the course of a year, the Central Bank can buy about $20–25 billion.

Regulatory intervention in foreign exchange market operations will help balance the budget, but it will come at a price: citizens will face an artificial weakening of the ruble and accelerated inflation.

Additional oil and gas budget revenues in 2017 will amount to 1.4 trillion rubles at a price of $50 per barrel and 2 trillion rubles at $55 per barrel. 1.8 trillion rubles have been allocated from the Reserve Fund to cover the budget deficit, so that in a favorable scenario and the activation of a new budget rule, reserves could be replenished by more than 200 billion rubles.

“It is unreasonable to endlessly finance the deficit by eating through reserves, which have become considerably thinner since 2014. The best way in such a situation is to weaken the ruble somewhat,” says Sergei Khestanov, advisor to the Otkritie broker. The devaluation primarily benefits the federal budget, whose revenues increase in ruble terms.

Metallinvestbank analyst Sergei Romanchuk believes that the actions of the Ministry of Finance pursue several goals at once. The main motive is the formation of a new budget discipline that will protect the government from wasting oil and gas windfalls. The second goal is to reduce the volatility of the ruble: purchasing currency in conditions of high oil prices should reduce the dependence of the exchange rate on fluctuations in quotes. Finally, to cover the budget deficit, the authorities need a cheap ruble.

According to the Ministry of Finance’s calculations, to achieve the required budget parameters, the ruble needs to be devalued by about 10%. The dollar exchange rate, which is included in the budget for this year, is 67.5 rubles, and the current value of the American currency is about 60 rubles. “I think this is where the 10% figure comes from, although the Ministry of Finance did not justify it,” says Igor Nikolaev, director of the FBK Institute for Strategic Analysis. Purchasing foreign currency is necessary in order to preserve the Reserve Fund, which otherwise would have been exhausted this year. “Given the presidential elections, this is an important task. In 2018, we will have to spend more money, but now, while there is a good situation with oil prices, we can buy foreign currency,” says the economist.

It is possible that if oil prices fall, the purchased currency will soon have to be sold back, but such an operation will no longer take place on the open market, but as an internal transaction between the Central Bank and the Ministry of Finance. As in the case of spending the Reserve Fund, the currency will be transferred to the gold and foreign exchange reserves of the Central Bank, and the Ministry of Finance will receive emission rubles for the corresponding amount. The government will make money from exchange rate differences, but such a mechanism for financing the budget deficit will stimulate inflation.

The market reacted ambiguously to the news about the resumption of Central Bank interventions: many considered this a violation of the “free floating” regime in which the ruble has been since the end of 2014.

The main drawback of the government's plans is that they are based on continued high oil prices. “According to our estimates, prices will drop significantly below $50 per barrel in the near future. First of all, due to the fact that the United States will begin to implement its energy security strategy and reduce oil imports, but also due to the increase in Fed rates,” says Nikolaev. The government is aware of these risks, the expert believes, hence the desire to begin replenishing reserves as soon as possible.

Petr Sarukhanov / “Novaya”

In connection with the expected devaluation of the ruble, the population needs to mentally prepare for an increase in retail prices.

“Imported goods, which in large cities occupy 40-45% of the consumer basket of Russians, will rise in price in proportion to the weakening of the ruble. Domestic goods will rise in price somewhat less, but part of their cost also consists of imported components,” explains Sergei Khestanov.

The $20-25 billion that the Ministry of Finance can buy out within a year is a fairly sensitive amount for the Russian market. To avoid panic among investors, it is necessary to extend the intervention schedule and conduct operations as transparently as possible.

But the government cannot insure itself against all risks: if external shocks are superimposed on the devaluation, the situation will get out of control. “If other factors play against the ruble, such as falling oil prices and an increase in the Fed rate, we may face a situation similar to the end of 2014, when the ruble devalued by almost half. And then its weakening by 10% will seem like flowers,” Nikolaev warns.

Will there be a devaluation of the ruble in 2017? This question is one of the most popular among search engine users. What awaits the national currency in the coming months and should we worry about the safety of our hard earned money?

Stable exchange rate – is it good or bad?

In recent months, the national currency has maintained a stable position in relation to the world currency. Director of the FBK Institute for Strategic Development Igor Nikolaev asks the question: has it stabilized or is it stuck? And is it possible for the ruble to devalue in 2017 in Russia?

It is impossible to answer this question unambiguously and accurately in the long term. The population and business assess the situation with the strengthening of the ruble positively - the national currency seems reliable. The Ministry of Finance insisted that the devaluation of the ruble in 2017 is inevitable, because due to “excessive strength” the national currency would need to be slightly weakened. Therefore, the government will most likely support the Ministry of Finance’s proposal to devalue the ruble by 10 percent in 2017.

On a note! From the point of view of oil prices, the current ruble exchange rate is overvalued, from the point of view of the budget deficit, it is undervalued (the desired level should be 67-70 rubles per dollar).

The stability of “wooden” today is explained by:

    curbing inflation to encourage Russians to spend on goods and services rather than buying dollars and euros for future use;

    the prospect of rising oil prices;

    market speculation on interest rate differences.

The money flowing into the treasury partially covers the budget deficit, and therefore there is no point in abandoning it.

Prerequisites for strengthening

Recently, financiers are increasingly comparing the Russian currency with the epic Ilya Muromets, who lay on the stove for 30 years and 3 years (in the case of the ruble - only 3 years), and then began to demonstrate “heroic strength.”

There are fundamental prerequisites for its revaluation:

    a confident recovery of the Russian economy from the crisis;

    high key rate of the Central Bank of the Russian Federation – 10%;

    high yield on federal government bonds – 8%.

Already at the end of last year, the national currency looked confident, and in February its impending strengthening was realized.

On a note! The ruble ended 2016 with a growth of more than 17% - such a record was inaccessible to any other currency in the world.

What to expect this year?

Experts suggest that the upward movement in March will continue due to inertia. Pairs 55-56 (dollar-ruble) and 58-60 (euro-ruble) seem quite realistic today. Although we should not forget that the Russian currency has been demonstrating its best qualities at the end of the year for the last couple of years.

Important! It will be difficult for the national currency to maintain its regained positions, so a slight weakening is quite possible in the summer.

The strength usually lasts for a couple of months, that is, in May the positions will return to their previous level. Will there be a devaluation of the ruble in 2017 in the fall? Expert forecasts suggest that the national currency exchange rate will be higher than the same period in 2016, and possible factors for growth may be:

    high payments on external debt in early to mid-spring;

    expected reduction of the Central Bank rate at the end of March;

    extension of the Ministry of Finance programs for the purchase of reserve currency.

It is in March, Alpari analysts believe, that the issue of exchanging savings for dollars will become especially relevant, especially for those who decide to go on vacation abroad. If you choose between the euro and the dollar when purchasing, it is recommended to give preference to the latter.

Some experts are talking about another strengthening of the dollar on the world market. Others suggest possible weakening. But so far there is no clear picture, and both of them advise foreign currency investors not to fuss. But it’s definitely not worth purchasing “exotic tugriks” due to the lack of clear visibility of the factors influencing the formation of the exchange rate of French francs, Chinese yuan, Japanese yen, etc.

This is interesting! The most severe devaluation was observed in 1945 in Hungary, when the national currency lost 400% daily.

Don't let it get stronger!

This is exactly what the President of the Free Economic Society Sergei Bodrunov calls for. He considers the rate of 56 rubles per dollar excessive, and through a reduction in the key rate and new portions of purchased currency by the Central Bank, it is possible to maintain the desired rate even if oil prices rise.

The only important thing is:

    create mechanisms that do not allow money to go abroad;

    inject Russian money into the country's economy;

    continue adaptation of domestic industry;

    reduce the key rate to make the ruble more accessible to Russian business;

    maintain and increase the level of competitiveness.

Is a strong ruble as scary as it is painted to be?

The practice of intervention (intervention) of the main financial regulator in weakening the ruble exchange rate was already used quite recently - in May-July 2015. Then the Central Bank regularly replenished foreign exchange reserves, however, it began to do this after the fall of the dollar, and then the strengthening of the “wooden” only the Bank, but also the market itself.

After 3 months, foreign exchange transactions were stopped, and a rapid weakening of the Russian currency began against the background of the return of Iranian oil to the world market after the lifting of international sanctions. Then credit lines for banks helped, when foreign currency was loaned in large volumes, so that in the end the banks had no need and nothing to fill the box with dollars and euros.

Hidden devaluation with competent financial policy has undoubted positive consequences:

    export growth;

    increasing demand for goods from domestic producers within the country;

    reducing the expenditure of gold and foreign exchange reserves;

    increasing the competitiveness of the national economy.

What does the devaluation of the ruble in 2017 mean for ordinary citizens?

    Declining purchasing power due to falling income growth.

    Rising inflation.

    Depreciation of deposits.

If it does collapse, what should you do?

Ruble devaluation 2017 – what does it mean? In simple words, this is a depreciation of the national currency in relation to foreign currency and a decrease in the gold backing of the ruble. Strictly speaking, devaluation is a completely natural process that helps manage the financial system and improve the economy.

If there is a strong devaluation of the ruble in 2017, what should we do? It is necessary to prepare for force majeure in advance, and for this:

    do not keep savings in one currency;

    invest money in real estate (buy or build);

    invest in the quality of life - make repairs, go on a trip with the whole family, undergo health improvement in a sanatorium, etc.

Establishing a floating exchange rate helps to quickly adapt to changing market conditions and curb the influence of negative factors. We can only hope that the Russian financial system will emerge from the protracted ordeal with minimal losses.

The rise in oil prices supported the ruble's positions. In the second half of the year, the Russian currency continues to strengthen, but this trend may stop in the near future. Moreover, experts allow a new period of ruble devaluation in 2017 in Russia if events develop according to the most negative scenario.

The position of the optimists

The current sanctions and the collapse in oil prices were reflected in the rapid devaluation of the Russian currency. During the crisis, the ruble depreciated significantly, which helped reduce the shock to the economy. Next year, nothing threatens the position of the ruble, officials are sure. Stability in the foreign exchange market will be ensured by an increase in oil prices and the resumption of growth in the domestic economy.

According to estimates by the Ministry of Economic Development, the average exchange rate in 2017 will be 67.5 rubles/dollar. The Russian economy has passed the period of recession and is moving towards gradual growth. In addition, the stability of the ruble will be linked to the dynamics of the oil market.

Next year's budget sets the price of oil at $40 per barrel. At the same time, analysts believe that average annual prices for “black gold” will be able to gain a foothold in the range of $50-55 per barrel, which will provide the budget with additional revenues.

Morgan Stanley representative Andrew Sheets emphasizes that the ruble has not yet exhausted its potential for strengthening. In addition to the favorable situation on the oil market, the dynamics of the Russian currency will be related to the policy of the Central Bank. The regulator is in no hurry to increase the supply of ruble liquidity, which strengthens the position of the ruble. In addition, the performance of the American economy does not allow the Fed to raise the discount rate, which is reflected in the value of the dollar.

Representatives of VEB predict a decline in the dollar exchange rate next year. Under the most optimistic scenario, currency quotes will reach the level of 60 rubles/dollar.

Oil market trends remain unstable, posing a threat to further devaluation. Pessimistic forecasts of experts allow for a significant weakening of the Russian currency next year.

Threat of devaluation

A new collapse in oil prices will result in a significant devaluation of the Russian currency, experts predict. If the cost of a barrel drops to $25, then the dollar exchange rate will reach 90 rubles/dollar, according to Bank of America representatives. Raiffeisenbank analysts agree with this forecast, allowing the ruble to weaken to 95 rubles per dollar.

Alfa-Bank believes that the value of the Russian currency will avoid sharp fluctuations. However, the ruble will continue to lose its position, reacting to the consequences of the economic crisis. As a result, the average annual dollar exchange rate will be fixed in the range of 70-75 rubles/dollar.

Another factor that could lead to a new period of devaluation is the budget deficit. At the end of the current year, expenditures will exceed revenues by 3.9%, the Ministry of Finance predicts. As a result, the load on the Reserve Fund increases. Next year there will be no fundamental improvement in the situation; this year's trends will remain unchanged.

The budget deficit will be above 3%, and the reserves of the Reserve Fund will be completely depleted. In addition, the government plans to use part of the NWF funds to finance budget expenses. Another about 1 trillion rubles. will be raised through internal borrowings.

This situation leaves very little room for maneuver, experts say. Next year, officials plan to carry out full indexation and make a one-time payment to pensioners. However, any deterioration in the external environment will jeopardize the implementation of the authorities’ initiatives.

Given this situation, the government may weaken the position of the ruble, which will affect the increase in budget revenues. As a result, the budget deficit will be partially financed with the help of share premiums.

Additional problems for the ruble next year may be associated with rising geopolitical tensions. Western countries have returned to discussing new sanctions against the Russian Federation, which is associated with the development of the conflict in Syria. The parties cannot agree on a joint action plan, which can lead to negative consequences for the foreign exchange market. New restrictions will be a blow to the economy and put pressure on the ruble’s position, analysts say.

The dynamics of the ruble in 2017 depends on the state of the economy, trends in the “black gold” market, budget indicators and geopolitical tensions. The optimistic scenario assumes further strengthening of the ruble, as a result of which the dollar exchange rate will reach 60 rubles/dollar.

A pessimistic forecast suggests a new stage of devaluation. As a result, the value of the Russian currency will decrease to 70-75 rubles/dollar, and in the most negative scenario to 90-95 rubles/dollar.

Will the ruble collapse in 2017? Experts from the Development Center of the National Research University Higher School of Economics told us whether we should be afraid of a sharp devaluation of the ruble.

The fall in oil prices in the near future threatens to result in a sharp devaluation of the ruble, which has strengthened noticeably this year thanks to the high rate of the Bank of Russia, which attracts international financial speculators. This is stated in the next report of the Development Center of the National Research University Higher School of Economics, “Comments on the State and Business.”

Strong ruble - high ricks

Commenting on the decision of the Ministry of Finance of the Russian Federation to enter the foreign exchange market, experts note that the Bank of Russia leveled this measure by absorbing additional liquidity, which leads to an increase in the attractiveness of Russian assets. “This, in turn, all other things being equal, will lead to an increase in the influx of speculative capital into the country, which, on the contrary, will contribute to the revaluation of the ruble,” the report says.

According to economists, the longer oil prices remain at a high level relative to the budgeted level, the greater the volume of speculative money can flow into Russia. However, this conceals one of the most significant risks: a possible reversal in the trend of world energy prices will lead to the withdrawal of this “hot” money from the Russian market. “And the later such a reversal happens (if it happens), the greater the demand for foreign currency will be presented, and almost simultaneously,” experts from the Development Center predict.

It is unlikely that it will be possible to avoid a fairly rapid depreciation of the ruble. And the more the ruble strengthens, the more powerful its fall may be

At the same time, both the Ministry of Finance and the Central Bank will be tied in their ability to conduct currency interventions. The Ministry of Finance - the “fiscal rule”, and the Central Bank - the declared policy of inflation targeting and floating exchange rate, economists believe.

These conclusions are confirmed by the fact that after the start of currency interventions, the ruble remained stable. It is obvious that there is currently increased speculative demand for Russian financial assets. “High yields on the domestic government debt market and the strengthening ruble are extremely attractive for operations such as carry trade. It is no coincidence that the share of non-residents in the OFZ market, according to the Bank of Russia, increased from 21% at the beginning of last year to 27% at the end of September (by 0.4 trillion rubles). In the balance of payments, this was reflected in an increase in portfolio investments in the secondary government securities market by more than $5 billion in the first three quarters of last year. In this case, we are talking about speculative operations, so at the end of the year a significant part of the money (almost $4 billion) left the market,” the report says.

According to experts, most likely, this year the Bank of Russia will continue to adhere to a tight monetary policy, and interest rates will remain at a relatively high level, which will continue to attract foreign investors to the domestic debt market. However, no one can cancel the danger of their abrupt departure.

Where is the bottom of the Russian economy?

Commenting on the situation in the domestic economy, specialists from the Development Center note that in 2016 its structure changed little. The most significant shifts were the reduction in the share of trade (-0.5 percentage points) and construction (-0.3 percentage points) with weak growth or maintaining the existing share of other sectors.

The changes compared to pre-crisis 2013 are somewhat more noticeable. “Over three years, the situation in the raw materials and power sectors has improved against the backdrop of a decrease in the share in GDP of trade and construction “tied” to consumer and investment demand,” the report notes.

In this situation, Russia remains extremely dependent on oil prices. According to economists, the question of whether the Russian economy has pushed off the bottom will be resolved by itself if the price of domestic “black gold” Urals, which increased by more than $10 due to the decision of OPEC and other oil-exporting countries to limit the level of oil production, remains at the achieved level levels.

“With a non-declining oil price and growing exports, a slight growth in the Russian economy is guaranteed. According to our estimates, with oil at $50/barrel. and export growth of 1.7% in 2017, the economy will grow by 1.5% (of which all 1.5 percentage points will be due to the effect of rising oil prices), and at $55/barrel. - by 1.9%,” the report’s authors predict.

However, experts add that in subsequent years, if oil prices stabilize, economic growth under the inertial scenario may slow down again to 0.5-1.2%.

“Overcoming the crisis will become more difficult if oil prices do not remain at current levels, for example, due to increased shale oil production or a slowdown in global economic growth,” the Development Center emphasizes.

Everything can end

The head of the Center for Economic Research at the Institute of Globalization and Social Movements, Vasily Koltashov, also sees significant risks in the strengthening of the national currency.

“The strengthening of the ruble is fraught with an intensification of the economic crisis. And this is a paradoxical situation. On the one hand: rising oil prices and the strengthening of the ruble contribute to the solvency of the population; citizens will be able to buy more foreign goods. But on the other hand, this does not help to overcome the crisis. And rising oil prices do not return us to the situation that existed before mid-2008, when the economy was growing,” the economist said.

According to a report by the International Energy Agency, a significant increase in oil prices provided strong support to the Russian currency. In Europe, due to the cold snap, demand for oil increased significantly, and China increased imports by 27 percent.

“There are no internal reasons for joy from the strengthening of the ruble. As for external reasons, everything can break off at any moment and turn downwards. Perhaps this will happen in the form of a long-term decline in hydrocarbon prices, and therefore a weakening of the ruble. These two scenarios could have come true last year, and this year too. There are no objective reasons for the economy to emerge from the crisis and begin to recover. We are in limbo; the strengthening of the ruble should not deceive us,” Koltashov believes.

When to buy dollars?

Most economists agree that the dollar/ruble pair will not stay below 60 for a long time. In this regard, you can consider buying US dollars at current levels.

According to a review of the investment and corporate division of Sberbank, a fall in the Russian currency to 64 rubles per dollar may occur in the coming months.

“We believe that the new scheme of foreign exchange interventions may trigger the growth of the USD/RUB pair to the level of 64 (our current forecast for the end of the year) faster than we expected. The impact of such ruble weakening implies an increase in inflation of 1 percentage point, but these inflationary pressures will be counteracted by maintaining tight monetary policy for a longer time,” the review says.

At the same time, according to Sberbank CIB analysts, the Ministry of Finance’s foreign exchange interventions will not lead to a significant weakening of the ruble in February, taking into account the favorable seasonal dynamics of the current account and the relatively small volume of debt payments.

“However, the effect of currency purchases may increase in the second and third quarters, when the current account surplus will be small,” analysts say.

The report notes that the Central Bank is likely to delay the next key rate cut until June 2017 to allow time to assess how foreign exchange interventions affect consumer prices and inflation expectations.

According to the forecast of Sberbank CIB analysts, the regulator will reduce the key rate by the end of 2017 by 150 basis points to 8.5% per annum.