Jul 31, 2020
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Will the ruble devalue in August?

The exchange rate of the Russian currency is falling: if yesterday the euro exceeded 86 rubles, today, for the first time since March 30, it has risen in price to 87.7 rubles. The dollar is not lagging behind: yesterday they gave 73 rubles for one "American", today - 74.1 rubles (the last time the dollar cost so much on May 14).

Why is the ruble depreciating, and whether the devaluation will continue in August, asked Associate Professor of the Department of World Economy and International Business of the Financial University under the Government of the Russian Federation Valeria Minchichova:

“The exchange rate of the ruble against both the dollar and the euro continues to fall. This trend is likely to continue in August. There are ongoing and new reasons for this. The former include the uncertainty of investors and, accordingly, the uncertainty of interest in Russian assets due to the pandemic, investments in defensive assets, primarily in precious metals, low prices for oil and gas, difficulties in the geopolitical situation between the United States and a group of countries at once: China, EU and Russia.

New reasons are, of course, the growth in demand for foreign exchange in Russia due to the opening of flights from August 1 with Turkey, Great Britain, Tanzania.

Traditionally, in August, dividends are also paid, which shareholders convert into foreign currency - again downward pressure on the ruble. In addition, the Central Bank of the Russian Federation has lowered the key rate to 4.25%, and it has already been indicated that this is not the limit for the reduction. Foreign exchange earnings from the sale of Sberbank shares will not be realized on the foreign exchange market, which means that its supply will not increase.

August is generally quite a difficult month for the ruble. You can call it “August superstition”, but the expectations and readiness of financiers for a weak ruble in August will play a role. Including the ruble may fall in price and due to the fact that business activity is reviving, business trends for the fall are formed. Import income is rather low - it is still a long way from winter.

However, import recovery after the pandemic and summer vacations can smooth out the fall in the exchange rate. As well as weather fluctuations. Moreover, both summer heat and cold will lead to an increase in demand for Russian fuel. "

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