The dollar is three rubles again. Why is this happening and what to expect next
After a fairly long period during which the dollar cost less than three rubles, the Belarusian ruble has once again crossed this psychological barrier. We asked an expert why this is happening and what to expect next.
The Russian ruble is losing even more
Not only the Belarusian ruble is depreciating, but also the Russian one. BEROC expert Anastasiya Luzhina names this fact as the main reason for the change in the Belarusian ruble's exchange rate.
"The Russian ruble is weakening, and the Belarusian one traditionally follows this trajectory. At the same time, if you look at the ratio of the Belarusian ruble to the Russian one, the Belarusian ruble, on the contrary, is strengthening," the expert notes.
While the Russian ruble depreciated against the dollar by approximately 7.5% over the last month — from about 79 to 85 rubles — the Belarusian ruble dropped against the American currency by 4.2% — from 2.88 to 3 rubles per dollar.
Luzhina explains this difference by the fact that our currency does not have a strict peg to the Russian one, although it is highly dependent on exchange rate fluctuations in Russia.
All because of Russia
"Russia's share in Belarusian trade is very high, plus many settlements are conducted in Russian rubles. Therefore, the Belarusian ruble reacts to the situation in Russia, but if you look at internal Belarusian factors, there are no reasons for a decrease. Accordingly, the main reason affecting its weakening is the dynamic of the Russian currency," the expert believes.
Everything is stable on Belarus's foreign exchange market. The population sells more foreign currency than it buys. Residents also sold more foreign currency than they bought last month. Even Belarusian companies, traditionally net buyers of foreign currency, sold more foreign currency than they bought in July.
"It turns out that there is enough foreign currency on the Belarusian market, which is also evident from the gold and foreign exchange reserves. The National Bank bought approximately 35 million in dollar equivalent of foreign currency last month.
However, despite this, the ruble's exchange rate is falling against the dollar, euro, and yuan, and this is primarily due to the depreciation of the Russian ruble," says the expert.
Despite there being no problems with foreign currency on Belarus's domestic market, the Belarusian ruble will still follow the Russian one.
Why is the Russian ruble depreciating?
As for the Russian ruble's decline, a number of factors are affecting it, which impact Russia's foreign exchange earnings.
"For several months, the Russian ruble felt quite stable due to high oil prices, which were still present in April-May. Contracts concluded at high prices increased the inflow of foreign exchange earnings into the Russian Federation.
But since payments for them do not happen immediately, foreign currency receipts for previously concluded contracts arrive in the account after 1-2 months," Luzhina explains.
It turns out that Russia is now receiving payments for contracts concluded in late June — early July, when prices were lower than in spring.
AFU long-range strikes are working
Another important factor influencing the foreign exchange market in the Russian Federation, the expert names Ukrainian strikes on Russian oil refineries. As a result, Russia not only loses part of its foreign exchange earnings from oil product exports but also spends foreign currency on purchasing fuel from other countries.
As for further forecasts, the Russian ruble's exchange rate will largely depend precisely on these two factors: world oil prices, Ukrainian strikes, and Russia's ability to defend its oil refineries and restore the operation of previously disabled facilities.
Among other factors influencing the Russian foreign exchange market, Luzhina names the start of the holiday season, when demand for foreign currency from the population increases.
"Plus, from August 7, the Russian Ministry of Finance began buying approximately 20% more foreign currency under the budget rule. This also leads to a weaker ruble," Luzhina notes.
What's next?
According to the expert, at least within the next week, a continued fall of the Russian ruble, and with it the Belarusian ruble, should be expected. However, later, the approach of a new tax period in the Russian Federation may lead to an increase in foreign currency sales, which could at least halt the exchange rate's decline.
"Also, oil prices have risen again now, which may affect the foreign exchange market in the future. Therefore, the decline observed recently might stop," Luzhina notes.
The dollar is not the only indicator
At the same time, the economist points out that the weakening of the exchange rate against the US dollar is now smoother than it could have been if the American currency had remained unchanged, as the dollar itself depreciated slightly during the same period.
"If you look at the euro exchange rate, the ruble's weakening against the euro will be more significant than against the dollar," the expert notes.
In Belarus, at least at the household level, people are accustomed to primarily focusing on the dollar's exchange rate, not the euro's. Overcoming the psychological mark of three rubles could once again reduce confidence in the national currency. As a result, household de-dollarization might halt, which had seen many people starting to prefer rubles when the exchange rate was stable below 3 rubles per dollar.
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