Why has the ruble fallen so much over the past month and what's next

Over the past month, the Russian ruble has demonstrated a lightning drop to its unfriendly American partner - from 80 to 93 rubles for one American dollar.

Officials do not comment on the true reason for the sharp fall of the ruble, referring to the market transition to the exchange rate system (in conditions of falling prices and sanctions), which will only go to benefits the economy and the budget.

Based on the assessment of the balance of payments of the Ministry of Finance of the Russian Federation for June 2023 , a current account deficit of 1.4 billion was envisaged.US dollars, which in itself has already affected the weakening of the ruble in the plans.

The trade balance was envisaged at the level of +6.4 billion.US dollars (exports 32.5 billion US dollars, imports 26.1 billion USA), which has been the lowest for the last 6 months.

Taking into account the fact that the balance on the balance of services, as well as primary/secondary income (financial receipts/liabilities) have consistently had negative values lately (more currency is leaving in these directions than it comes), which do not allow to cover the plus on commodity transactions, and this general minus loomed.

It is more or less clear here that the discount on hydrocarbons plus the falling price on the market for them contributed to a decrease in total export revenue.

But besides these factors, there is another most likely reason for this volatility - the increased outflow of capital from the country.

What does this mean?

In addition to the fact that individuals themselves continue in small volumes to withdraw their money in foreign currency abroad, someone from non-residents who are under the sanctions freeze (of their capital) on the territory of Russia was allowed to sell their assets, buy currency and withdraw it abroad.

Against the background of this circumstance, this surge most likely occurred due to the sharp fall of the ruble against the dollar. The volume of foreign investments in the Russian Federation is not one billion US dollars, but about 500, so the sensitivity of the ruble to currency conversions in such volumes is very high.

So far, the ruble has overcome the psychologically important mark of 90 rubles per dollar. And what's next?

If the ban on the withdrawal of capital from the country is lifted, even at the level of bilateral agreements to remove restrictions, Russia will be allowed to withdraw its capital from the West, and the West from Russia, then the probability of a repeat of this scenario is very high. And the level of the psychological mark against the background of rising prices for hydrocarbons can be adjusted already at a slightly higher level.

The solution of the issues of strengthening and stabilization of the ruble is connected with all the same directions: