New sanctions against Russia affect tenge. To be continued?
Almaty. August 16. KazTAG - Sergey Zelepukhin.The thing the experts had been talking about so much has come true. The imposing of new anti-Russian sanctions, primarily by the US, had a negative impact on the Russian ruble, which has subsequently negatively affected tenge exchange rate. But it looks like the worst is yet to come.
As KazTAG previously predicted, the national currency of Kazakhstan made a noticeable devaluation jump. Only within a week since July 28 until August 4 of this year inclusively, the nominal average rate of dollar soared by 12.35 tenge - from 321.01 tenge to 333.36 tenge and since June 5 until August 5 - by more than 20 tenge.
The peak of the fall in the official rate of the national currency over the past month fell on last Thursday, when the dollar rate went up to 335.71 tenge. Last time the rate of the American currency at the same level was fixed on December 5, 2016, that is 8 months ago.
In fact, recently the national currency weakened following the Russian ruble even against the growth of oil prices: on July 27, the price of futures for Brent crude climbed higher than $50 per barrel, reaching $ 52.38 on August 4.
Under the pressure of sanctions
As it was expected, new sanctions against Russia imposed by the US this time have become the negative factor for tenge rate imposed a week before after the signing of an appropriate law by Donald Trump. It prescribes at least three sanctions that can have a negative impact on the Russian currency market, and through it also on tenge, not only in the short term, but also in the medium and long term.
That is because the adopted document turns the existing decrees of former US President Barack Obama on sanctions against Russia into an indefinite law that cannot be canceled by other presidential decrees.
First, one of the sanctions reduces the time limit from 90 to 60 days, for this period the American companies are entitled to lend to Russian Gazprom Neft, Rosneft, Novatek and Transneft. At the same time, the terms of lending to Russian state banks have been reduced from 30 to 14 days.
Secondly, another sanction prohibits crediting of new energy projects, where the share of the Russian side reaches at least 33%.
Thirdly, another sanction prohibits investing in Russian pipeline projects, and also to provide them with goods, services and technology, the price of each of them exceeds $ 1 million or their total cost exceeds $ 5 million within one year.
Obviously, all these sanctions will negatively affect the flows of foreign currency to and from Russia in the long run. And it will affect the exchange rate of ruble, and then it will impact tenge.
But, perhaps, the most dangerous thing for the Russian currency is in the future. As already noted in one of the previous articles, the US Treasury was instructed to work out a proposal within 180 days on whether US investors and investors connected with the United States should be prohibited from investing in Russian government bonds, in which only the Americans have already invested more than $ 10 billion .
If the ban is introduced, this measure, according to experts, is able not only to block the inflow, but also to provoke a sharp outflow of portfolio investments from Russia, thereby causing a sharp collapse of the ruble, similar to the one that happened in December 2014. And this will inevitably cause devaluation of tenge.
However, this is only a medium-term risk, but it should not be forgotten.
What to expect tomorrow?
As for the near prospects, it can not be ruled out that tenge can decline again. But much will depend on the dynamics of the ruble rate. However, experts' assessments of short-term prospects for the Russian currency are not promising.
For example, according to the analyst of Forex Club Irina Rogova, ruble has every chance to get under pressure. She refers to a number of arguments. "Geopolitical tensions continue to increase. Following the United States, the EU has also extended sanctions against Russia," Rogova said.
Another factor against the ruble, according to her, is that dollar received support from the Friday's report on the US labor market. "Of course, this is not yet an occasion to wait for the US federal reserve to raise the rate at a meeting in September, but still it can make changes in the expectations on the Fed's monetary policy until the end of this year," the expert believes.
In contrast to this, according to I. Rogova, inflation data in Russia indicate possible reduction of rates by the Central Bank of Russia in September. "According to Rosstat, the inflation rate slowed to 3.9% in July in annual terms from 4.4% in June," she said.
In addition, the decision of the Russian Ministry of Finance to significantly increase the purchase of currency in August in comparison to July will not play in favor of ruble.
"Last month, interventions amounted to 74.3 million rubles. In August, it is planned to spend 47.6 billion rubles on foreign currency purchase. And this is also a factor of pressure on ruble, "she said.
At the same time, according to I. Rogova, as for oil prices "so far it is not worth waiting for a breakthrough". "Exports in the OPEC countries are growing. The production in the US is growing as well - the indicator reached the maximum level in 2 years. On this background it will be difficult for Brent to fix above $ 53 per barrel, unless the US reserves report the coming week a sharp decline, which may be due to seasonal demand, she said.
Nevertheless, in her opinion, the situation is not playing in favour of ruble now. "The whole set of factors can lead to the fact that the pair USD / RUB will test resistance 60.9-61. In case this level is outreached, the target may be the level of 61.6, " the expert predicts.
If the forecasts of Forex analyst come true, we can not exclude the fact that tenge will soon reach new multi-month lows. The only factor that can prevent this is the continuous growth of oil prices