The ruble closed the week with growth against the dollar and the euro

The US dollar and the euro fell noticeably on the Moscow Exchange following the results of trading on Friday afternoon; the ruble rose against the dual-currency basket against the background of the absence of new impulses that have a pronounced negative character.

The US dollar exchange rate was 57.17 rubles/$1 at 19:00 Moscow time, which is 1.33 rubles lower than the closing level of the previous trading. The euro cost 57.96 rubles/EUR1, depreciating by 73.75 kopecks. The value of the dual-currency basket ($0.55 and EUR0.45) decreased by 1.06 rubles to 57.5 rubles.

According to Interfax-CEA experts, the ruble rose against the dollar and the euro following the results of the last trading week. Market participants positively assessed the absence of a new negative in terms of the risks of strengthening the geopolitical negative around the Russian Federation following the results of an additional plenary meeting of the State Duma, at which, as announced, only some personnel issues and bills were considered.

The State Duma may hold other extraordinary meetings before the start of the autumn session, an informed source told Interfax on Friday. „There may be other additional extraordinary meetings before the start of the autumn session,” the source said.

He noted that „this corresponds to the position that deputies should always be on the mobilization agenda.”

In addition, the players ignored the news on the subject of sanctions. The Canadian Foreign Ministry announced the introduction of new sanctions against Russia in connection with a special operation in Ukraine.

„On July 14, 2022, Canada made further amendments to the rules on special economic measures (Russia) to prohibit the provision of two production services to the Russian oil and gas, chemical and manufacturing industries,” the document said on the ministry’s website.

It is noted that eight new industries from these sectors have been added to the sanctions list.

According to the clarifications of the Ministry of Foreign Affairs, „any person in Canada and any Canadian outside Canada is prohibited from providing services to Russia or any person in Russia” related to the production of metal products, computer, electronic and optical products, electrical equipment, cars, trailers and semi-trailers, transport equipment, land transport and pipelines.

The proposals of the European Commission for new sanctions against the Russian Federation include a ban on the import of Russian gold, increased restrictions on the export of dual-use goods and on the transfer of advanced technologies, the EC said in a statement.

Also, according to the EC, in its proposed package of sanctions, it is emphasized that „EU restrictive measures are in no way aimed at trade in agricultural products between third countries and Russia.”

„We propose to extend the already existing EU sanctions for six months: until their next scheduled review at the end of January 2023,” the EC reports.

Earlier on Friday in Brussels, a senior EU official told journalists about the agenda of the forthcoming EU Foreign Affairs Council on July 18: „There will be a discussion on sanctions. We are preparing a number of measures.” He told the media that on Friday the European Commission would brief them on „the various areas of work we are doing on sanctions.”

According to him, this is not another package of sanctions per se. We are talking about maintaining the existing sanctions, improving them, perfecting them. Some measures will be added to the existing ones, but „we are rather talking about improving, consolidating our previous packages of sanctions,” the EU functionary specified.

The interlocutor of the journalists also confirmed that during the discussion, the members of the council would discuss the proposal to ban Russian exports of gold.

Oil prices accelerated Friday evening, recovering from falling to April lows ahead of US President Joe Biden’s visit to Saudi Arabia.

September futures for Brent oil on London’s ICE Futures exchange rose by 19:00 by 2.33% to $101.41 per barrel. Quotes of futures for WTI for August in electronic trading on the New York Mercantile Exchange (NYMEX) are growing by 2.38% – up to $98.06 per barrel.

The attention of oil market participants is directed to Biden’s visit to Saudi Arabia. The US president is expected to meet Saudi Crown Prince Mohammed bin Salman, as well as other Arab leaders including Egypt, Jordan, Iraq and the United Arab Emirates. Analysts believe that Biden will try to convince Middle Eastern countries of the need to increase oil production.

On the eve of The New York Times, citing former American diplomat Martin Indick, there are high expectations that Saudi Arabia will increase production by about 750 thousand barrels per day, and the UAE – by 500 thousand b / d, that is a total of 1.25 million bpd.

Analyst comments
Elizaveta Naumova, a senior analyst at Alfa-Bank , noted in an interview with Interfax that the ruble continued to grow on Friday, testing the level of 57 rubles/$1. “In general, its desire for growth is not a surprise, as long as there is only discussion of measures (without concrete actions) to stabilize the exchange rate by the Central Bank, the Ministry of Finance and the government. Nevertheless, a strong ruble is harmful for the economy, so in the medium term the ruble may indeed return to a more comfortable range for our exporters,” Naumova notes.

„In relation to the exchange rate of the Russian ruble, we can say that it is now influenced by market assumptions about possible relaxations on the part of the country’s financial regulators and the current situation with an excess supply of foreign currency in the country. This distortion will clearly put pressure on the value of foreign currency for some time, but this process is not eternal.We assume that the equalization of demand for foreign currency as part of the expansion of imports and the stabilization of investment flows into the country at some point will bring the value of the Russian ruble, which, according to many exporters, „abnormally strengthened”, back to normal. we also rule out another round of strengthening the ruble exchange rate to levels very close to the level of 50.05 – 55.55 rubles per one US dollar, „says a senior analyst at IK”Russ-Invest „Roman Blinov.

Based on the Moscow Exchange data on the average weighted dollar and euro exchange rates against the ruble for transactions concluded from 10:00 to 15:30, the Central Bank of the Russian Federation lowered the official dollar rate for the weekend and Monday by 42.45 kopecks, to 57.8323 rubles. /$1, and reduced the euro exchange rate by 45.81 kopecks, to 57.8851 rubles/EUR1.

The weighted average rate of the dollar by „today” settlements at the auctions of the „Moscow Exchange” fell on Friday by 57.5 kopecks compared to Thursday and amounted to 57.6742 rubles/$1. The weighted average rate of the dollar at the session „tomorrow” by 19:00 Moscow time fell by 61.02 kopecks and amounted to 57.6611 rubles/$1. The volume of trading in dollars by that moment was equal to $2 billion 704.086 million, of which $1 billion 180.235 million accounted for deals with „today” settlements and $1 billion 523.851 million – for deals with „tomorrow” settlements.

The weighted average rate of euro by calculations „today” grew by 35.95 kopecks, up to 58.7033 rubles/EUR1. On the contrary, the weighted average rate of the euro by „tomorrow” calculations decreased by 51.97 kopecks, to 57.8324 rubles/EUR1. The trading volume of the euro amounted to EUR779.713 million, of which EUR27.25 million accounted for deals with „today” settlements and EUR752.463 million – for deals with „tomorrow” settlements.

Rates on the market for short-term and medium-term (1-6 months) interbank loans mostly fell slightly on Friday relative to the previous trading day. The exception was the overnight MosPrime Rate, which rose by 2 basis points (bp) to 9.49% per annum, while the MosPrime Rate for seven-day loans decreased by 1 bp. – up to 9.52% per annum. The rate for a period of 1 month decreased by 3 bp. – to 9.49% per annum, the rate for a period of 3 months decreased by 2 b.p. – to 9.53% per annum, the rate for a period of 6 months retreated by 7 bp. – up to 9.56% per annum.