Selling currency earnings, the largest Russian corporations partly defined the dynamics of the ruble, writes in his review of Sberbank CIB analyst Iskander Lutsk. Most of these sales have traditionally provided the oil and gas sector, he adds.
“The share of oil and gas companies in the structure of foreign exchange supply in the market peaked in August of 2014, amounting to 83%. In the third quarter of 2014, this figure began to decline, since the decline in oil prices resulted in a reduction of revenue, and to date it is less than 50 per cent,” says Lutsky.
However, he notes that since the second half of 2014 the oil and gas sector sold more foreign currency than was required to Fund core expenses. Thus, the company has complied with the government requirement to maintain “fallen” ruble.
Now the situation is changing, and companies will be to reduce sales on the foreign exchange market indicates Lutsk. According to him, in 2016, the foreign exchange supply in the periods of tax payments will decrease by half, “It means that the monthly supply of foreign currency will fall to $3.1 billion For comparison, in 2015, the figure was $6.2 billion”.
Such a conclusion, the analyst Sberbank CIB has done by building a cash flow model for oil and gas companies. Possible liquidity problems that may appear due to the volatility of oil prices can affect corporate cash flow, he says.
Minimum amount of currency that exporters will need to convert this year for tax payments and funding the operating costs will be reduced by 44% compared to the year 2015, says Lutsky. In addition, corporations “will need some foreign exchange to Finance a dollar of investment programs and repayment of dollar commitments,” he adds.
“Previously, the sale of foreign currency earnings was the determining factor for the ruble, but now its value has decreased this factor only supports the national currency and reduce exchange rate volatility,” writes the analyst.
The importance of the oil and gas sector is declining not only for Forex market but for the economy as a whole, adds Lutsk. For example, the contribution of oil and gas companies to the Federal budget fell to 28.6% — the lowest rate since January 2009, when Brent crude was quoted approximately at the same levels as now.
Tuesday, 26 April, 17:30 GMT, Brent crude oil cost of $45.3 per barrel, the dollar on the Moscow exchange was worth to 66.1 rubles.