Moscow. August 17. The 18th anniversary of the most famous of the Russian financial turmoil of recent history (1998 Russia defaulted on government bonds) would like to share some observations I have made in the bowels of the Center for economic analysis. They relate to the context of the ruble and prices of oil.

At first glance, the ruble leaps and jumps rather erratically. But very much that was a simple formula that would explain everything.

## “Popular” formula

Two years ago (actually a little less) this formula appeared. To whom it is attributed – including Boris Nemtsov; the author is inclined to believe that her formula gave birth to at the same time many experts, so it can be considered folk.

This formula is as follows: the ruble exchange rate is determined from simple considerations that the price of oil in rubles has to be permanent. The only question is – what: in winter from 2014 to 2015 was considered that the desired level of 3600 rubles per barrel; then, when the country began to “get used” to the idea that oil prices dropped for a long time, scores began to move lower (looking ahead, we note that this parameter fluctuated quite strongly in the beginning of this year dropped to 2300 rubles per barrel, as if mocking those who believed in its efficacy).

The logic in the formula, actually, there is – and this logic is the fact that the budget revenues of the Russian Federation are largely dependent on prices of oil (and, thus, in case of validity of the formula of the Russian Federation receives from oil exports all the time the same amount of rubles, regardless of fluctuations in the price of oil in dollars). But the market was a bit more complicated and we will now describe the formula, which is now (explicitly or implicitly) considered the price of the ruble.

## The formula of the author

So, the formula found by the author in the depths of the digital streams running through the Center of economic analysis. For convenience, reduce fractions, don’t take one ruble and hundreds of the paper. What number of us banknotes it is possible to evaluate this bill?

It turns out that the answer is very simple: for a hundred rubles to 1 dollar 8 cents, plus so many cents, how much is in dollars the current price of a barrel of oil (Brent). Now oil costs about $49 per barrel: so, a hundred rubles, you can assess $1,57 ($1,08+$0,49). Awkward figure? Yes, the ruble was accustomed to quote the opposite (in rubles per dollar) – this figure should be recalculated. 100 for $1,57 is the same thing that 63.7 per ruble for 1 dollar.

Like the current rate? That doesn’t seem like it will not matter, the formula is still not exact, approximate. It just reflects the fact that with a course happened in the past two months. Note – with pretty good accuracy.

Well – if noticed by us, the ratio is maintained, and further, that it implies, for example, that if oil prices (Brent) will grow to $50 per barrel, the dollar will retreat to 63.3 ruble; if oil reaches $60 a barrel, the dollar will be at 59.5 ruble; at $70 per barrel, the dollar will retreat to 56.2…

Well, in the opposite direction: during the retreat of Brent to $45 per barrel, the rate would be 65.4 per ruble at $40 per barrel 67.6 ruble, and at $35 per barrel, the U.S. currency back to the mark of 70 rubles.

## Pessimistic-realistic formula

Note – the formula based on that we suggested, not really working on a longer historical period. Because it is too “optimistic” to the ruble – at a long interval dependence on oil laid down in the formula is insufficient.

They are very well work the other formula of “attributing” the ruble is a much higher degree of dependence on oil. And is also quite simple. Through it, hundreds of the bill is necessary to give 58 cents plus the current price of a barrel of oil (Brent) in dollars, multiplied by two (the latter, as before, in cents).

Let’s count again: current $49 a barrel means $1,56 (=$0,58+2*$0,49). Or 64.1 per ruble per dollar. Too close to the current rate. This formula suggests that with oil at $35 per barrel, the dollar rises above 78 rubles., and, on the contrary, if oil prices reach $60 per barrel, the dollar is only slightly above 56. Reader, we are sure, easily he will be able to povarirovat figures the price of oil, and to compare with the price levels observed in previous months and years.

And make sure that this second formula, approximately (but – on average – very good) runs in the last two years.

Andrey Lusnikov