At its highest since December: what's happening to the ruble

The ruble exchange rate continues to rise. After a short correction, the Russian currency rose by 17 cents against the yuan during the January 29 session. At one point, the ratio reached 10.74 rubles per yuan, after which the Russian currency adjusted slightly. The ruble has been at its maximum against the Chinese currency since the first days of last December.

A similar trend is developing in the interbank market with the dollar. According to the exchange rate of the Central Bank, the "American" on January 29 fell by 28.57 kopecks and amounted to 76.2662 rubles. The euro, on the contrary, rose by 36.59 cents. Apparently, the dollar is waiting for another fall against the ruble in the morning, as it has noticeably weakened during today's trading on world stock exchanges. The main reason is investors' expectations that the Fed rate will decrease, although not this time. It looks like the American authorities are now deliberately weakening the dollar.

Photo: IZVESTIA/Andrey Erstrem

That's what is supporting the ruble's growth at the moment.:

• Geopolitical events. The latest information about the progress of the negotiation process (new round — February 1) in the Russian-Ukrainian conflict is encouraging traders to buy domestic currency. Now optimism has been added by the statement of the head of the EU Foreign Policy Department, Kai Kallas, that Ukraine will most likely have to give up part of the territories for the sake of peace. News about the success of peace talks almost always strengthens the ruble's position. Finally, the parties may be close to an energy truce for some time - at least, Russian officials do not deny this.

• Objective demand for currency. At the beginning of the year, it is usually low. At the same time, the Bank of Russia increases sales of the yuan and the dollar within the framework of the budget rule. A slight decrease in supply from exporters does not interrupt the factors acting in favor of the ruble.

• Inflation is slowly starting to slow down after a surge at the very beginning of the year. The latest data indicates a weekly price increase of 0.19%. It's still a high indicator, but compared to the take—off of the first weeks of the year, it's bearable. Thus, the effect of the VAT increase is exhausting itself. This may be positive for the ruble, however, if the Central Bank does not cut the rate too close.

• In principle, the dollar is not in the best shape and there is no end in sight to this process.

Photo: IZVESTIA/Yulia Mayorova

It should be noted that the dollar in rubles is now cheaper than 10 years ago. There has never been such a long-term trend in the entire history of observations. The dollar could have held steady around a certain mark for several years, but not for a whole decade.

At the end of last year, most analysts predicted a slight strengthening of the major currencies against the ruble in the first quarter. This is not happening yet. The Bank of Russia is in no hurry to lower its key rate, and the main imbalances that keep the ruble at high levels against the yuan, euro and dollar remain in force.