What will the dollar and euro exchange rates be in 2021 in Russia?

Recently, the dollar/ruble pair has been behaving quite unpredictably, making savings holders nervous. We have collected forecasts for the ruble exchange rate for 2021 from various departments and market participants. If we sum them up, then in general no one expects any particular strengthening of the Russian currency against the dollar.

By the end of last year, the state of the domestic currency left much to be desired. In 2021, the ruble lost more than 20% of its value against the dollar, and the loss against the euro exceeded 15%.

Thus, the domestic currency started 2021 at a level of about 68-69 rubles per dollar. Many were already preparing for the dollar’s ​​further rise to levels above 70 rubles, but unexpectedly the American turned back and began to slowly but surely retreat. In mid-March, the dollar on the stock exchange was already trading below 64 rubles. He remains in this area for now.

Fresh dollar exchange rate forecast. Will there be growth?

Here's how Kira Yukhtenko, chief editor of InvestFuture and stock exchange observer, assesses the dollar's prospects for autumn and winter 2021:

Until we see the final version of US sanctions against Russia, it will not be easy for the dollar to firmly gain a foothold below 65 rubles. There is too much uncertainty for investors. We do not know whether the sanctions will affect Russian state-owned banks and whether a ban will be introduced on the ownership of Russian government bonds.

In my opinion, the following scenario is likely: in November the ruble will face increased volatility. After the elections to the US Congress on November 6 and the meeting between Trump and Putin on November 11, the American side will return to discussing sanctions. During this period, the dollar can rise above 70 and even above 75 rubles.

In fact, sanctions may not be as harsh as the market fears. And if the price of Brent oil remains at least above $70 per barrel until the end of the year, the ruble will have a chance to strengthen in December.

However, do not let your guard down: economists are warning of a new global crisis already in 2019-2020. If the gloomy forecasts come true, the currencies of all developing countries, including the ruble, will suffer

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What factors influence?

Today it is quite difficult to predict the behavior of the ruble even in the short term, since it is influenced by a variety of factors.

Firstly, this is a sanctions moment. Since 2014, the ruble has reacted nervously to any attempts to introduce restrictions against the Russian economy. And although over the years a certain immunity has developed and, for example, there are no panic attacks by bank depositors in attempts to close ruble deposits and convert them into foreign currency, nevertheless, general nervousness in the market still remains. And you can’t completely get rid of it.

Secondly, the situation in the world. Our country is part of world markets, therefore all processes that occur abroad are reflected in the exchange rate of the domestic currency. In past years, the markets of developing countries experienced a record outflow of capital, and this factor also affected the position of the ruble.

Thirdly, tax payments. During periods of preparation for large tax payments to the budget, exporting companies actively buy rubles on the market, which affects the exchange rate of the domestic currency, helping it strengthen.

Fourth, trade. We have a strong balance of payments. This means that we sell a lot abroad and at the same time we do not spend so much on buying foreign goods. As a result, more currency enters the country than leaves it.

In addition, there are a number of very important parameters that affect the ruble exchange rate, but we decided to dwell on them in more detail.

What will happen to the dollar/ruble exchange rate in 2021?

Dollar/ruble chart (Weekly)

No one can accurately predict the dollar exchange rate - too many factors simultaneously participate in its formation. But, taking into account the high foreign policy risks and structural problems in the Russian economy, experts agree: the ruble exchange rate may continue to decline in the fall and winter of 2021.

At the end of 2021, the dollar to ruble exchange rate may rise to 73-75 rubles. If you want to buy a currency for long-term savings, listen to the advice of economists: any depreciation can be used for purchases

Risk factors for the ruble

• The Federal Reserve continues to raise interest rates, putting long-term pressure on the currencies of all developing countries
• Expectation of the final package of anti-Russian sanctions from the United States in November 2021. Additional sanctions from the EU and UK are also possible.
• Possible decline in oil prices - the United States insists that Russia and Saudi Arabia “bring down” the price by increasing production
• Trade wars around the world - a slowdown in growth rates for all the world's largest economies is possible

Factors supporting the ruble

• The Central Bank of the Russian Federation raised the key rate in September 2021, and also suspended currency purchases for the Ministry of Finance as part of the budget until the end of the year. This decision allowed the exchange rate to stabilize in September.
• Until the fall, the price of oil continued to rise thanks to the OPEC agreement, as a shortage formed in the market.

Economists believe that the positive factors listed above will limit the potential for the ruble to weaken in the coming months. Without them, the Russian currency would be in danger of falling more rapidly.

Oil and the ruble

In particular, we are talking about the situation with oil prices. Since a significant part of our exports and budget revenues is tied to oil, then, accordingly, the country benefits from high oil prices, and with it the domestic currency. But the decline in oil prices is forcing the ruble to lose ground.

By the way, making forecasts on the oil market is also a thankless task. Not only does it depend on the actions of OPEC member countries, as well as on shale oil production, but the oil market also seriously reacts to the policies of the US Federal Reserve. Raising rates means a stronger dollar, and a stronger dollar means less oil. Accordingly, oil prices begin to decline.

Judging by the latest meeting of the US Federal Reserve, the base rate will remain at 2.25-2.5% this year. Further rate increases were postponed but not cancelled. This means that this factor will still retain its influence on the oil market, and with it on the exchange rate of the domestic currency.

However, here it is necessary to mention one very important point, thanks to which the ruble, although it reacts to the oil market, is no longer as dependent on it as before. The situation was influenced by the fiscal rule. This is a rule under which all oil and gas revenues received at a price above a certain level do not go to the country’s economy, but are transformed into currency and put aside in reserve in special funds.

Last year, the cut-off bar was at $40 per barrel. At the same time, world oil prices were much higher than this level. But the effect of the price difference was felt only by the country's reserves. They got bigger. With the help of this rule, it was possible to reduce the long-term dependence of the ruble on oil prices, although, of course, we are not talking about complete elimination.

Forecasts for the end of 2021 by month

Dollar forecast for October 2021

The consensus forecast for the dollar/ruble exchange rate for October 2021 is 67.98 rubles. October may turn out to be a difficult month for the ruble: we are waiting for details of US sanctions against Russia and fighting panic within the country.

Dollar forecast for November 2021

The consensus forecast for the dollar to ruble exchange rate for November 2021 is 70.39 rubles. On November 6, elections to the US Congress will take place, and after this date, Republicans and Democrats can resume discussion of anti-Russian sanctions.

Government forecast

The Russian Government is already making forecasts for the euro and dollar exchange rates for 2021. What will happen to the European currency in 2018? The forecast for this year is quite positive. The authorities predict that next year the ruble will continue to strengthen and will show positive dynamics throughout the entire period. The exchange rate will be as follows: the euro will not exceed the level of 45-50 rubles throughout 2021, and the dollar will stop at around 35-38 rubles.

True, there is also a more pessimistic forecast for exchange rates for the future period, because the Russian treasury is on the verge of depletion, reserve funds are also coming to an end, Western countries plan not only to maintain sanctions, but also to tighten them. Therefore, some officials believe that the forecast for the new year will not be so rosy: the euro will exceed the 85 ruble mark, and the dollar will approach the 80 ruble line. Whether the euro will grow against the ruble or not will be known for sure by the end of this year.

Forecast of the dollar and euro against the ruble for 2021. Table by month

Based on the forecasts of 11 stock analysts, we compiled average forecasts for the dollar and euro against the ruble by month. The forecasts in the table are given at the end of the month. These data are not a guide to action, but show the expectations of professional market participants.

Ruble forecast for autumn 2021

Analysts unanimously say that the ruble exchange rate by the end of the year implies an increase, correction and growth again. Serious pressure on the national currency will occur in October, when the Bank of Russia makes adjustments to the trade balance. Stock analyst and leading trader Stepan Demura predicts that after these events, the Russian currency will face a sharp collapse to 82 rubles per dollar.

Bank of America chief economist Vladimir Osakovsky is also confident of a fall, but according to his forecast, it will happen as early as this month.

“August will be the worst month of the year , since it is during this period that the capital outflow from Russia is recorded. Domestic companies pay dividends to foreign investors from late July to early August. For example, Gazprom is going to pay dividends totaling $400 billion, of which foreign partners will immediately convert a third into foreign currency. This will have a big impact on the economy and the ruble exchange rate,” the economist is sure.

One way or another, today we need to prepare for the fall of the national currency and the continued rise in prices in Russian stores and gas stations.

Is it worth buying dollars?

Most experts agree that there is no need to buy dollars at the moment. The rate fluctuates at 64-65 rubles and will not provide significant profits from the difference in quotes. This may be of interest only to owners of large sums, since there will be no profit with a minimum investment in US dollars.

Pessimistic forecasts say that the dollar could rise to 80 rubles. In this case, inflation will eat up household incomes. Many analysts are confident that savings must be kept not only in rubles, but also in alternative banknotes in order to eliminate the risk of default.

At the same time, those who have dollars should not sell them; it is better to put them in a foreign currency deposit and accumulate interest.

Inflation slowdown

The Ministry of Economic Development expects inflation to slow down at the beginning of 2021 to 3.5%.

“In 2021, inflation is expected to decline to 3.8% y/y, while at the beginning of the year it will approach 3.5% y/y,” the document says.

At the same time, according to the department’s materials, the weakness of domestic demand in the first half of the year against the backdrop of a tight budget and monetary policy will ensure low inflation rates in the coming months, which in general in 2021 will ensure its reduction to 4.3% year on year in December after passing the peak value of 5.3% year-on-year in March.

GDP growth forecast

In August, the Ministry of Economic Development may raise its forecast for Russian GDP growth in 2021 from 1.3%.

“The growth rate [of the economy] for the year as a whole is still estimated at 1.3%, but if current trends continue, it may be increased when the forecast is revised in August,” the document says.

At the same time, GDP growth in January-February of this year is estimated by the Ministry of Economic Development at 1.1% year-on-year, which is generally higher than initial expectations. In 2021, the department estimates economic growth at 2%, in 2021 - 3.1%, in 2022 the growth rate will be 3.2%, in 2023-2024 - will reach 3.3%.

Investment growth in 2021 is expected at 3.1%, in 2021 - at 7%, in 2021 - 6.3%, in 2022 - 5.8%, in 2023 - 5, 6% and in 2024 - 5.3%, which is lower than the dynamics of the ministry’s previous forecast.

The exchange rate of the Russian ruble and the reasons for its changes

After the rapid fall of the ruble in December 2021, a correctional strengthening is developing in the foreign exchange market. Due to this phenomenon, the dollar fell in price by the end of winter 2021 and dropped to 65 rubles, and the euro costs just under 75 rubles. This strengthening has reduced the anxiety of the population, but future prospects are not encouraging.

Financial analysts agreed that the ruble will collapse in 2021. They draw their conclusions based on the following factors:

1. The Central Bank of Russia raised the interest rate from 7.5 to 7.75%. Such a decision in the context of an economic crisis suggests that the regulator is trying with all its might to prevent devaluation and a sharp drop in the national currency. But such a step will not stop the decline; at best, it will make it smoother.
2. The sanctions have not been lifted. Hopes that the restrictions imposed on the Russian Federation by the US Congress and EU leaders would be lifted turned out to be in vain. The sanctions were extended for another 12 months, and their review is possible only in the winter of 2021.
3. Inflation rates are growing, and it is becoming increasingly difficult for the financial regulator of the Russian Federation to keep them within the acceptable limits of 4-4.3%.
4. The upward trend in oil, which supported the value of the Russian currency in 2021, is ready to break. The reasons for this are: the development of shale deposits in the United States and the slowdown in global economic development, which leads to a decrease in demand for black gold.
5. Economic and geopolitical factors force foreign investors to withdraw their capital by selling Russian assets, which has a negative impact on the stock and foreign exchange market of the Russian Federation.
6. The Central Bank said it will continue to buy currency as part of the program to replenish the National Welfare Fund, and this will lead to a rise in the dollar and a weakening of the Russian currency.

Due to the above reasons, financial experts have no doubt: in 2021 the national currency will weaken, and the dollar and euro will rise in price. Some analysts even openly state that the Central Bank of Russia cannot avoid the devaluation of the domestic currency.