The ruble exchange rate against the euro and the dollar continued to decline on Thursday evening amid sanctions risks and uncertain dynamics of oil prices. The dollar updated on Thursday the maximum of the year, rising to 69.44 rubles. The dollar rate by 18.44 Moscow time rose by 0.9 rubles to 68.97 rubles, the euro rate – by 1.35 rubles to 78.25 rubles, according to the Moscow Exchange. The cost of Brent crude oil by this hour rose by 0.5% to $ 48.7 per barrel.

At the highs of the year

The ruble during the trading day on Thursday demonstrated downward dynamics against the background of the persistence of geopolitical negativity. The intensification of hostilities in eastern Ukraine is fraught with new sanctions against Russia, Western officials say, and this puts pressure on the ruble. In particular, Spanish Foreign Minister Jose Manuel Garcia-Margallo does not rule out the introduction of new sanctions against Russia by the EU if the situation in eastern Ukraine continues to deteriorate.

The end of the January tax period also reduced support for the ruble from foreign currency sales by exporters. Against this background, apparently, the Ministry of Finance had to sell foreign currency from its balances on Thursday to support the ruble exchange rate. This, in particular, can be evidenced by the decent trading volume and some decline in the dollar and euro rates closer to the evening, dealers say. World oil prices also do not yet give cause for optimism of ruble bulls.

Their inability to gain a foothold at the psychologically significant level of $50 per barrel poses a threat to the medium-term prospects of the ruble. Against this background, dollar bulls aimed at the round level of 70 rubles and did not reach it about 50 kopecks, thus updating the maximum of the current year.

Forecasts and recommendations

The threat of expanding EU sanctions and uncertainty related to further actions of the US Federal Reserve System makes investors buy the dollar rather than the ruble, says Sergey Kochergin of Exness. “Meanwhile, tomorrow’s meeting of the Central Bank of Russia may provide the latter with support. Against the backdrop of sprawling inflation in the Russian Federation, the Russian regulator is likely to keep the key interest rate unchanged at 17% per annum. We believe that if the dollar rises above 70 rubles, the Central Bank and the Ministry of Finance will conduct currency interventions,” Kochergin noted. The introduction of new sanctions against the Russian Federation is apparently still postponed, and in these circumstances, all the attention of Russian market participants will be turned to the meeting of the Bank of Russia on the key rate on Friday, said Yuri Kravchenko of IK Veles Capital. “With a high probability the regulator will keep the key rate at the current level (which is facilitated by inflation risks and continuing uncertainty in the currency market), which is to some extent positive for the ruble, but the effect of this will be recouped quickly enough, or will not be noticeable in the market at all”, – Kravchenko predicts with less optimism.