The main question that ruble traders ask themselves is whether the Central Bank managed to prevent a collapse in the exchange rate? At the moment, the euro is officially worth 104.4, and the dollar is 93.5.
According to a leading analyst at FxPro, the ruble is recovering from the second shock wave that hit on Monday, when the Central Bank was unable to use foreign exchange reserves to stabilize the exchange rate. The dollar and the euro declined somewhat, but these levels still can hardly be called sustainable. An increase in the interest rate has a relatively long-term effect, while a liquidity crisis affects quotes "here and now".
A steady reversal to growth in the Russian currency should be expected no earlier than when we receive reliable signals from the EU and the US. Until then, downward impulses may alternate with relatively short pullback periods. In our opinion, some stabilization of the exchange rate may occur in the range of 100-110 since this is a low enough level for traders to start picking up the ruble in the short term. Of course, this is only if we exclude the scenario of further tightening of sanctions.
There is another issue that worries the consumers who are now in Russia. We are talking, among other things, about foreign citizens who came to Russia to do business or for personal reasons. Many of them have free balances in the region of 100 thousand rubles in their bank accounts. As a rule, business people short-term invest capital or acquire their own currency. The question arises of what to do with this capital now.
In our opinion, it is better to save free money for force majeure, since in the current circumstances, it is worth increasing the capital and abandoning all unplanned purchases. If you are in Russia, then it is better to keep your savings in rubles since it is not profitable to buy currency in banks now, as the exchange rate difference is too large.
Of course, in the coming weeks and months, equipment and all imported goods in the territory of the Russian Federation will rise in price significantly. At the same time, the value of cash in the near future may manifest itself more than ever. This is confirmed by queues at ATMs and multiple increases in cash in the hands of Russians.
Many right now are looking towards buying a new car from a showroom with the prospect of selling it in a few months at a higher price (in light of the sanctions).
If your capital is even larger, it perhaps remains only to wait since the withdrawal to foreign accounts is limited. Thus, Russian residents will not be able to credit foreign currency to their accounts and deposits in foreign banks and brokers. The ban takes effect today.
This article was written by FxPro’s Senior Market Analyst Alex Kuptsikevich.