The US dollar and the euro fell on the Moscow Exchange following the results of trading on Monday. The ruble rose against the dual-currency basket against the backdrop of positive signals from external markets, actively rising oil prices and in the context of exporting companies preparing for the peak of the tax period of the month.

The US dollar exchange rate amounted to 56.34 rubles. at 19:00, which is 84.5 kopecks below the closing level of previous trading. The euro cost 57.15 rubles, having fallen in price by 82 kopecks. The cost of the dual-currency basket ($0.55 and EUR0.45) decreased by 83.4 kopecks to 56.7 rubles.

According to Interfax-CEA experts, the ruble rose against the dollar and the euro following the results of trading on Monday in the face of steadily rising oil prices and demand for ruble liquidity from exporting companies against the main tax payments in July. The ruble is also supported by increased risk appetite in global markets due to reduced concerns about the acceleration of the Federal Reserve’s (FRS) base interest rate hike against the backdrop of high inflation.

Representatives of the leadership of the US Federal Reserve are signaling that they are likely to raise the key rate by 75 basis points (bp) following the results of the July meeting as part of efforts to combat the acceleration of inflation. Thus, the regulator will decide on such a sharp increase in the rate for the second meeting in a row.

In June, the US Central Bank raised the rate by 75 bp. for the first time since 1994. Fed Chairman Jerome Powell said at the time that the rate would be raised by another 50-75 bp in July, and the market was pricing in a 75 bp hike at the most. The Fed rate is now at the level of 1.5-1.75%. The next meeting of the regulator will take place on July 26-27.

At the same time, at some point, representatives of the Fed’s leadership did not rule out the possibility that the rate would be increased by 100 bp in July, but some of them have recently begun to dismiss such an idea in the course of public speeches and interviews.

Fed Board member Christopher Waller said last week that he favors a 75 bp hike in the benchmark interest rate. in July. At the same time, he noted that economic statistics, which will be published in the near future, may change his opinion in favor of a sharper rise.

Meanwhile, Waller said markets may be „getting ahead of themselves a bit” in anticipation of a 100bp rate hike.

At the end of last week, traders estimated the probability of its rise by 100 bp at once at 85%. at the meeting on July 26-27 from the current level of 1.5-1.75% per annum. Prior to last week’s release of US inflation data for June, the market estimated that probability at around 3%. Raising the rate immediately by 100 bp. could have been the largest since the early 1990s.

Consumer prices jumped 9.1% last month, setting a new high in more than 40 years.

The situation with the strengthening of the ruble exchange rate will change due to the reorientation of Russia to trade with neutral countries, says German Gref, President and Chairman of the Board of Sberbank.

„The ruble has strengthened for two reasons. Firstly, the transfer of currency abroad due to financial sanctions has become more complicated – the currency began to accumulate in bank accounts. Secondly, trade sanctions and self-sanctions of foreign companies have limited imports – it has become more difficult to spend the currency. Accordingly, to contain strengthening of the exchange rate is possible either through foreign exchange interventions or by expanding opportunities for imports. Buying hard currency for the accumulation of the NWF is currently unavailable, so the Ministry of Finance is studying the possibility of buying the yuan and other soft currencies,” Gref told reporters in Derbent.

„Further on, the situation with the exchange rate will be corrected by restructuring logistics for trade with neutral countries,” he added.

The re-strengthening of the ruble worries Russian companies, primarily exporters. In attempts to combat this process, there was even an idea to switch back to managing the exchange rate from inflation targeting.

The Ministry of Finance proposes to influence the exchange rate of the ruble in the conditions of its excessive strengthening through a new budget rule, while interventions should be carried out through the currencies of „friendly” countries. The Ministry of Economic Development does not support this idea, sees in it the risks of worsening the situation in the economy.

The Central Bank insists on maintaining the inflation targeting regime and the floating exchange rate of the ruble. “When external conditions change, the exchange rate immediately changes. Yes, we adhere to a floating exchange rate policy, because it is the floating exchange rate that allows the economy to adapt to changing conditions. devaluation, as we have already done,” the head of the Central Bank, Elvira Nabiullina, said earlier.

Oil
Oil prices are actively rising on Monday, recovering from last week’s fall.

The cost of September futures for Brent on the London ICE Futures exchange by 19:05 Moscow time on Monday is $105.76 per barrel, which is 4.55% higher than the closing price of the previous session. The price of futures for WTI oil for August in the electronic trading of the New York Mercantile Exchange (NYMEX) is $ 101.88 per barrel by this time, which is 4.4% higher than the final value of the previous session.

Brent fell 5.5% last week, while WTI fell 6.9%.

Traders continue to evaluate the results of US President Joe Biden’s visit to Saudi Arabia. Biden said following the visit that he had discussed with the leadership of Saudi Arabia the issue of oil supplies to the world market.

„We had a positive discussion on global energy security and reasonable oil supply mechanisms to support economic growth in the world,” he said. The politician also added that he expects from Saudi Arabia „further steps in the coming weeks.”

Meanwhile, the Saudi ministers stressed that the decision to increase production will be made depending on market conditions and within the framework of agreements within OPEC +.

“We listen to our partners and friends from all over the world, especially from consumer countries,” said Saudi Foreign Minister Prince Faisal bin Farhan Al Saud. “But ultimately, OPEC + follows the market situation and will supply energy as needed.”

Additional support for oil prices is provided by the depreciation of the dollar. The ICE-calculated index, which shows the dynamics of the dollar against six currencies (the euro, the Swiss franc, the yen, the Canadian dollar, the pound sterling and the Swedish krona), is losing 0.9% in the course of trading.

Expert comments
Andrey Alekseev, asset manager of PSB Management Company, said in an interview with Interfax that the ruble continues to strengthen against major currencies on Monday, the dollar-ruble pair is below 57 rubles. and may well drop to the lows of June. „The surge in foreign exchange sales by commodity exporters for tax purposes is likely to continue until the end of this week. So far, there is no new mechanism for sterilizing excess foreign currency into reserve funds. In August, the flow of foreign exchange earnings, in our opinion, will begin to gradually decline, which will slightly reduce pressure on the exchange rate,” Alekseev says.

investors were not impressed by the results of the talks between the US President and the Crown Prince of Saudi Arabia. Biden tried to convince the Saudi authorities of the need to increase oil production to reduce its cost, since current price levels contribute to high inflation in many countries. Media estimates regarding the results of these negotiations differ,” Dmitry Babin, an expert on the stock market at BCS World of Investments, notes.

Courses
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 on July 19 by 1.2707 rubles, to 56.5616 rubles, and reduced the euro exchange rate by 73.25 kopecks, to 57.1526 rubles/EUR1.

The weighted average rate of the dollar with settlements „today” at the auctions of the „Moscow Exchange” fell on Monday by 1.1085 rubles compared to Friday and amounted to 56.5657 rubles. and amounted to 56.5479 rubles. The volume of trades in dollars by that moment was equal to $2 billion 546.594 million, of which $1 billion 7.252 million accounted for transactions with „today” settlements and $1 billion 539.342 million – for transactions with „tomorrow” settlements.

The weighted average rate of the euro by calculations „today” fell by 75.27 kopecks, to 57.1844 rubles. The weighted average euro exchange rate by „tomorrow” settlements decreased by 67.73 kopecks, to 57.1552 rubles/EUR1. The trading volume of the euro amounted to EUR1 billion 121.384 million, of which EUR274.14 million accounted for transactions with „today” settlements and EUR847.244 million for transactions with „tomorrow” settlements.

Rates on the market for short-term interbank loans grew slightly on Monday, while rates on the market for medium-term (1-6 months) interbank loans remained at the level of the previous trading day. MosPrime Rate „overnight” and on loans for a seven-day period rose by 4 basis points each – up to 9.53% and 9.56% per annum. The rate for a period of 1 month remained at 9.49% per annum, the rate for a period of 3 months – at the level of 9.53% per annum, the rate for a period of 6 months – 9.56% per annum.