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Brazilian passion: the ruble falls after oil

Бразильские страсти: рубль падает вслед за нефтью

The ruble began to fall after the price of oil. An unexpected blow to the national currency came from Brazil, which has refused to join the deal on production cuts OPEC+. Experts believe that the national currency may soon fall in price to 60 rubles per dollar.

After oil quotations have sunk the ruble.

According trading, at 14:35 GMT, the dollar was trading at 59.55 ruble, Euro – ruble 69,07.

The official Euro to ruble set by the Bank of Russia on Thursday, increased by 96,63 kopecks to RUB 68,70, the dollar increased by 79,23 kopecks to RUB 59,24

According trading, at 14:35 GMT, the dollar was trading at 59.55 ruble, Euro – ruble 69,07.

The weakening of the national currency caused by falling oil prices.

On Monday, oil prices reached highs in June 2015 on the background of anti-corruption scandal in Saudi Arabia. This happened after the country had arrested four current Minister, dozens of former Ministers and eleven princes, including the well-known investor Prince al-Waleed bin Talal.

But on Tuesday the market was corrected downwards. So, futures for crude oil of Brent crude on the ICE Futures January at 14:20 MSK fell 0.19% to $63.6 per barrel.

Chief economist IK “Russ-invest” Alexander Harutyunyan doubts that oil for a long time went into a negative trend. Short-term, from June 2017, the price of Brent crude oil is growing, a mid year oil price fluctuated in a wide range of $44-58 per barrel. The latest sharp rise in prices, of course, connected with political events in Saudi Arabia, but from the point of view of technical analysis, there is a clear reversal of the oil prices up, experts say.

However, most analysts believe that the current oil prices are far from fair, and their growth in recent weeks was speculative and, therefore, the reverse process is inevitable.

Repression in Saudi Arabia will not change policy on the oil market, and will be only a temporary cause for speculation, emphasizes the partner expert group VETA Ilya Zharskiy.

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On the eve of the OPEC has slightly improved the forecast for world oil demand by 2022 to 102.3 million barrels per day. So, the cartel expects the annual increase in demand in the period up to 2022 will amount to a modest 1.2 million barrels a day, while previously, many experts, including those from OPEC member countries and noted that growth could be at the level of 1.8 million barrels per day.

Optimism in the oil markets adjusted also data from the American petroleum Institute (API), which had a less significant decline of oil reserves in the United States than was expected of 1.56 million barrels (up to 455,2 million barrels) instead of the predicted 2.4 million barrels.

Negative added and the refusal of Brazil to join the deal on production cuts OPEC+.

Secretary for oil, natural gas and renewable energy Ministry of mining and energy of Brazil, Marcio Felix told Reuters that he had received an informal offer to join the transaction from the Minister of energy, industry and mineral resources of Saudi Arabia Khalid al-falikha. However, refused. “We have already explained that Brazil cannot do that,” said the Secretary.

The level of production Brazil is on the same level with a member of OPEC Venezuela (about 2.65 million barrels of oil per day), but most of their energoresursov Brazilians do not export with the aim of obtaining income, and is processed for the needs of the domestic market, the largest in the region. A major exporter it is not and its impact on the situation on the world market is insignificant, the analyst of “ALOR Broker” Kirill Yakovenko.

The ruble dipped slightly along with oil, but it should be noted that we have not seen significant growth on the wave of oil positive, which suggests that the Russian currency is now stable and subject to influence from the commodity market to a lesser extent, draws attention Yakovenko.

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Exchange rate moves in their logic, I’m sure Zharsky. According to him, in the currency of active buyers who reasonably believe that 58 rubles per dollar is cheap, and stocking up on currency, unfounded fear of a new round of devaluation, in favor of which said the release of new bills, and low economic growth, and the preservation of Western sanctions, and escalating economic and technological isolation.

Experts agree that the dollar in the next 1-2 weeks will overcome a mark in 60 rubles.

Even with the return of the barrel back to the range of $50-55, the ruble will remain at the levels of 58.5-61 rubles per dollar and 67-68 RUB for Euro, says Yakovenko.

The weakening of the ruble in the fourth quarter was quite predictable, said the managing Director of BCS Ultima Oleg Safonov.

Support of the ruble from the OFZ market, which can be attributed the lion’s share of strengthening of the ruble since the beginning of this year, is losing relevance.

Additional negative news for the ruble growth currency purchases by the Ministry of Finance to 5.8 billion rubles. a day, adds Safonov. And next month we can expect a sharp increase of this indicator, if the ruble value of oil will remain at current levels.

The Bank of Russia due to high interest rates and attracting short-term foreign currency liquidity on foreign markets actively supports the domestic foreign exchange market, without affecting the volume of its international reserves, said in Comments on state and business Higher school of Economics. Without such assistance, given the external debt repayment until the end of the year, the ruble can significantly cheaper.

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