The intervention of the Ministry of Finance has exerted psychological pressure on the ruble

Currency purchases by the Finance Ministry, which he began after a two year break, the first day of such transactions have not had a significant impact on the ruble. According to the results of the day session on the Moscow stock exchange the dollar and the Euro has appreciated less than 1%, according to the auction. Volatility in the currency market on Tuesday was due to the decline in oil prices and the weakening of most international currencies against the dollar, experts believe.

On Tuesday, February 7, the dollar on the Moscow exchange increased to RUB of 59.33, strengthening to 20:00 GMT on 42 kopecks against the background of falling oil prices and the outbreak of currency purchases by the Finance Ministry. On the maximum of the American currency reached the level of 59,5 RUB the strengthening of the dollar occurred after his fall on the eve of Monday, February 6, his course was on 58,58 RUB.

The Euro also rose by 20:00 GMT 63,42 to RUB, strengthening of the close of the previous trading session at 7 kopecks.

The first intervention

“We have a feeling that the weakening of the ruble caused not only by decline in oil prices, but also the purchases of the currencies of major participants. Most likely, as expected, it was the Ministry of Finance”, — said a trader of one of the state banks. Head of trading, another major Bank, estimates the contribution of Finance to the strengthening of the dollar in 10 kopecks. “the rise of the dollar was mainly linked to falling oil prices, the actions of the Ministry of Finance had a more psychological effect. The market will draw conclusions about the future trend in the end of the week, when the accumulated effect of currency purchases by the Finance Ministry,” he said.

In a press-service of the Ministry of Finance confirmed that began operations on purchase of currency on additional oil and gas revenues on the market on 7 February. A source close to the Ministry of Finance announced that they were buying dollars, euros and British pounds. “It is planned that in the next month on behalf of the Ministry of Finance, the Central Bank will buy currency at a pre-approved proportions: the dollar and the Euro for 45% and the remaining 10% will be acquired by the pound”, he said.

Market participants indicate that while market purchases of the Ministry of Finance too subtle, since large orders during the day was not present. “Most likely, the purchases made robot that exhibited a lot of small applications,” says trader Western investment Bank. He noticed that the growth of the dollar was observed during the day, and after 18:00 Moscow time the ruble began to strengthen again. According to the financier, it may mean that the Ministry of Finance to buy foreign currency in the first half of the day, and then when purchases ceased, the dollar again began to decline.

Earlier, the Finance Ministry reported that from February 7 to March 6, will buy the domestic currency to 6.3 billion RUB daily. Just over a month it is planned to spend of 113.1 billion rubles, received from additional oil and gas revenues. “We are not yet ready to predict the movement of the dollar, because it is unclear how the Treasury will decide to weaken the ruble,” — said a top Manager of investment company. He believes that in the near future the intervention of the Ministry of Finance will not have a significant impact on the dollar against the ruble on the background of significant foreign exchange turnover in the market. On Monday, the volume of transactions on the Moscow stock exchange exceeded 183 billion rubles, the average January and February daily turnover in the foreign exchange market on the pair dollar/ruble were about 250-300 billion rubles.

The saving of the carry trade

Analyst “Discovery Broker” Andrei Kochetkov said that the strengthening of the dollar on Tuesday — a global trend. “The dollar today strengthened against most world currencies, — he says. In particular, the Euro-dollar exchange rate fell by 0.55% to $1,0688”. In addition, he believes that the American currency is supported by the low demand for rubles. “Rate money market MosPrime under credits for a period of one day at historically low levels,” he says. Since the beginning of the year it decreased by 0.43 PPT

The dollar began to recover against other currencies after a long correction related to the results of the elections in the U.S., says the analyst of “Finam” Bogdan Zvarich. He points out that the ruble is feeling much better other currencies, while remaining stable even with the falling oil prices. “Support the ruble speculators who sell the currency to carry out transactions carry trade (speculation based on the difference in interest rates. — ) and big companies who earn the rubles in their accounts in anticipation of tax period,” he says. In the end, according to analysts, if oil prices do not continue to decline, the volume of intervention of the Ministry of Finance is clearly not enough to keep the ruble from further strengthening.

In anticipation of the weakening of the ruble

Experts do not exclude that in the medium term, the ruble will experience double the pressure. First, from the interventions that contribute to the weakening of the ruble and, second, by the growing volume of carry trade operations, which allow the ruble to maintain its current position. The growth of carry trade analysts associated with maintaining the Central Bank’s key rate at around 10%. “However, we do not expect the intervention of the Ministry of Finance will have a significant impact on the ruble in February, a more substantial factor will be the price of oil,” says ING chief economist Dmitry Polevoy. Chief economist at Eurasian development Bank Yaroslav Lisovolik does not exclude growth of dollar to 60 rubles to the end of the week. “On the horizon in the month of course will depend on the volatility of oil prices and balance of payments”, — he said.

Sberbank CIB analysts also do not expect currency purchases by the Ministry of Finance will lead to a significant weakening of the ruble in February, because at that time expected significant sales of dollars by exporters. “However, currency intervention is fraught with asymmetric risks for the ruble exchange rate: the risks of growth are now more limited, and thus created the conditions for the easing,” they say in my review. The amount of current account surplus and capital outflow in February to be a higher volume of currency purchases by the Finance Ministry that will not allow the ruble to weaken, writing in its review, Credit Suisse analysts.