By Friday evening, the dollar and euro rates accelerated the decline on the Moscow Exchange, the ruble rose in price on the growth of demand for risk after the speech of the head of the US Federal Reserve System (FRS) Jerome Powell.
By 19:00 Moscow time, the dollar depreciated by 63 kopecks, to 73.6 rubles. The euro depreciated by 45.75 kopecks, to 86.78 rubles. The bi-currency basket ($ 0.55 and 0.45 euros) fell by 55.2 kopecks to 79.53 rubles.
According to the experts of Interfax-CEA, the ruble rises in price against the dollar and the euro at evening trading, having won back almost all the losses of the previous two days. Demand for risky assets intensified during Powell’s speech, during which he reiterated that he considered the recent surge in consumer prices to be temporary, and noted that the beginning of the expected decline in asset repurchases would not signal an imminent increase in interest rates.
Nevertheless, Powell noted that if inflation remains high, the Fed will undoubtedly take action to reduce price pressures.
“At the recent FOMC meeting, I, like most of the participants, was of the opinion that if the economy as a whole develops as expected, it would be advisable to start slowing down the pace of asset purchases this year,” he said. This is the first time Powell has publicly expressed his personal opinion, MarketWatch emphasized.
In response to questions, Powell said the Fed “will carefully assess the data coming in and the risks that arise.” He pointed out that “the timing and pace of the forthcoming cuts in asset repurchases will not serve as a direct signal regarding the timing of the interest rate hike.”
The US Department of Commerce reported that consumer prices (PCE index) in July rose 4.2% compared to the same month in 2020. These are the highest rates of recovery in 30 years.
According to Powell, inflation at this level is “worrisome,” but is mitigated by a number of factors. He noted that tightening monetary policy now could be a “particularly harmful” mistake. But if the sustained rise in inflation becomes a serious problem, the FOMC “will definitely react,” the head of the Fed added.
The heads of the Federal Reserve Banks (FRB) of St. Louis, Dallas, and Kansas James Ballard, Robert Kaplan, and Esther George said yesterday that they are in favor of a rapid reduction in the volume of asset repurchases by the US central bank, despite the risks associated with the “delta”.
Oil prices accelerated their rise on Friday evening, ending the week with a solid rally. The quotes were supported, among other things, by some easing of fears related to the consequences of the coronavirus on fuel demand.
By 19:01 Moscow time, October futures for Brent rose in London by 1.96% to $ 72.46 per barrel. By this time, October futures for WTI were growing in price in New York by 1.97%, to $ 68.75 per barrel.
Since the beginning of the week, the rise in oil prices is about 10%.
The focus of the market is on Tropical Storm Ida, which has already seen companies in the Gulf of Mexico including BP and Shell cut production.
In addition, traders are evaluating the speech of Fed Chairman Powell.
According to the results of the index session of the Moscow Exchange (part of the session on the dollar with settlements “tomorrow” in the period from 10:00 to 11:30), the Bank of Russia lowered the official dollar exchange rate for the weekend and Monday by only 0.42 kopecks, to 73.9866 rubles, and reduced the euro rate by 2.72 kopecks, to 87.0304 rubles.
The weighted average dollar rate by “today” settlements at the Moscow Exchange trading dropped 12.75 kopecks on Friday against Thursday and amounted to 73.9697 rubles per dollar. The weighted average dollar rate at the session with “tomorrow” settlements by 19:00 decreased by 19.36 kopecks and amounted to 73.9361 rubles per dollar. The volume of trades in dollars by that moment was equal to $ 2,979.901 million, of which $ 646.596 million fell on transactions with “today” settlements and $ 2,333.305 million – on transactions with “tomorrow” settlements.
The weighted average euro exchange rate for “today” settlements dropped by 9.01 kopecks, to 86.966 rubles per euro. The weighted average euro exchange rate by tomorrow’s settlements by 19:00 retreated by 13.99 kopecks and amounted to 87.0233 rubles per euro. The volume of trades in the euro by this time amounted to 671.497 million euros, of which 366.627 million euros fell on transactions with settlements “today” and 304.87 million euros – on transactions with settlements “tomorrow”.
Rates on the short-term interbank lending market rose slightly on Friday, while rates on the mid-term (1-6 months) interbank lending market remained at the levels of the previous trading day. The overnight MosPrime Rate increased by 1 basis point (bp) to 6.69% per annum, the MosPrime Rate on seven-day loans increased by 2 bp. – up to 6.76% per annum. Rates for terms of 1, 3 and 6 months have not changed compared to Thursday – 6.88%, 7.23% and 7.32% per annum, respectively.