Russian companies purchasing goods abroad are preparing for a further weakening of the ruble, Kommersant reports, citing representatives of several importers.

According to one of Kommersant’s sources, an entrepreneur who imports equipment to Russia, his company is factoring in the dollar at 120-125 rubles in internal settlements.

In the next three to six months, levels of 110-120 rubles per dollar may be reached, Kommersant’s source believes. However, businesses prefer to work “with a reserve,” he explains: “I don’t think any of the importers are optimistic about the ruble strengthening. It’s easier to factor in a wider spread.”

The level of 115 rubles per dollar is also mentioned by Ksenia Ryasova, CEO of Finn Flare, one of the largest clothing retailers in Russia. According to Ryasova, if this mark is reached, her company will have to shift foreign exchange costs into prices that currently take into account the old exchange rates.

Since the beginning of November, the ruble has lost 7% against the yuan, the same amount against the dollar and about 3% against the euro. The wave of devaluation swept the market after November 21, when the US announced new sanctions against the Russian financial sector, blacklisting five dozen banks, including state-owned Gazprombank. Having retained access to the SWIFT system and euro transactions, GPB remained one of the last major banks through which the Russian economy received an influx of foreign currency. The expansion of sanctions “put key pressure on the ruble,” notes Maxim Gladkikh, an analyst at TKB Investment Partners.

Russia has a currency deficit, which is compounded by a surplus of rubles, since the budget traditionally increases spending at the end of the year, notes Iskander Lutsko from the investment company Aigenis. He predicts the dollar will grow to 110 rubles in December.

New sanctions will hinder the return of foreign exchange export earnings to exporters, which may lead to a shortage of currency supply on the market, agrees Yegor Susin, Managing Director of GPB Private Banking. In the coming months, the market will lack approximately $2-4 billion in foreign exchange supply monthly, he estimates: “This may lead to an extremely unstable situation with liquidity on the domestic market, <…> excessive exchange rate movements, as in the summer-fall of 2023.”

The return of the ruble to the minimums of the currency panic of the first weeks of the war, when the dollar jumped to 120 rubles and higher, is only a matter of time, according to leading analyst at Finam Alexander Potavin. The ruble’s prospects are “not bright”, he believes: by the end of the year, the Ministry of Finance will significantly increase budget expenditures and there will be even more free rubles on the market, and the EU has begun work on the 15th package of sanctions against the Russian Federation – it may include restrictions on Russian LNG, the shadow fleet, as well as on the use of foreign technology.

(C)THE MOSCOW TIMES 2024