On Tuesday, the ruble weakened slightly (by 7.5 kopecks) against the dollar, weakened by 45 kopecks against the euro and closed above 75.00 for the first time since January 6. Also, the ruble again (as on Monday) fell by 1 kopeck against the yuan.

Trading volume in the dollar/ruble pair (tomorrow) amounted to 61.3 billion rubles against 48.4 billion rubles on the previous day.

– Trading volume in the euro/ruble pair (settlements tomorrow) amounted to 33 billion rubles against 37.4 billion rubles the previous day.

– Trading volume in the yuan/ruble pair (settlement tomorrow) amounted to 42.2 billion rubles against 36.1 billion rubles on the previous day.

Oil prices fell noticeably on the eve on rumors that OPEC will not consider at the next meeting to reduce the volume of supply to support prices. Cheaper oil put some pressure on the ruble. At the same time, the tax period provides support to the Russian currency. Wednesday is the peak of the January tax period: companies will pay VAT, mineral extraction tax and excise duties to the budget.

The range of fluctuations in USD/RUB pair on Wednesday is estimated between 69.50 and 68.00.

As for the prospects of the ruble exchange rate throughout 2023.

In our baseline scenario, a controlled recession could occur in both the US and Europe. China’s economy should recover more noticeably in the second half of the year. We estimate the average Brent price in 2023 at $84/bbl. By the end of the year, the North Sea grade will rise to $100/bbl.

If the volume of oil and condensate production in Russia amounted to about 10.7 mln bpd in 2022, in 2023 we assume that production may decrease by about 1 mln bpd. Urals discount to Brent is $30-35/bbl in early 2023, but should narrow to the usual $30-25/bbl for 2022 from mid-Q2. Weak exports put pressure on the ruble, but it is supported in the first months of the year by sales of currency from the National Wealth Fund.

Based on the above inputs, we expect USD/RUB to be around 70 in H1, but then expect it to rise to 75-80 in H2. The target for the end of 2023 is 77 RUB/USD.