Russian rouble set for steady decline back past 100 vs dollar in 2024 - Reuters poll

Presentation of newly designed Russian rouble banknotes in Moscow·Reuters
Alexander Marrow
2-min read

By Alexander Marrow

(Reuters) - The rouble's strengthening has largely peaked and the Russian currency is set for a steady slide back past 100 to the dollar in 2024, contributing to keeping double-digit interest rates higher for longer, a Reuters poll showed on Friday.

The rouble has strengthened sharply since a President Vladimir Putin decree on the mandatory sale of foreign currency for certain exporters was announced last month. The central bank's sharper-than-expected rate hike to 15% in late October also helped the rouble hit a three-month high of 91.6225 this week.

Ahead of a March 2024 presidential election at which Putin is widely expected to extend his rule, authorities may seek to project economic stability and resilience, but economists now anticipate that interest rates and inflation will be higher, and the rouble weaker, than in the previous monthly poll.

The average forecast of 12 analysts and economists polled in early November envisages the rouble trading at 103 to the dollar a year from now, up from 95 in the previous poll and around 93 on Friday.

Interest rates are seen ending this year at the current 15% level, dropping only to 12% next year, up from 10% forecast in the previous poll, while inflation is seen at 5.2% next year, only returning to the 4% target in 2025.

None of the analysts polled now see inflation reaching the lower end of the central bank's 4-4.5% forecast for inflation next year.

Russia has steadily worsened its 2023 inflation forecast and analysts now see price rises ending the year above 7%.

"We expect that inflation will rise to 7.7% by the end of the year and exceed the central bank's forecast of 7-7.5%," said Sovcombank chief analyst Mikhail Vasilyev. "We believe the Bank of Russia will increase the key rate by another 100 basis points to 16% at the next meeting on Dec. 16."

Analysts raised their expectations for Russia's gross domestic product (GDP) growth to 2.5% this year, from 2.3% in the previous poll. GDP growth in 2024 is seen at 1.5%, dropping to 1.3% in 2025.

(Reporting and polling by Alexander Marrow; Editing by Andrew Cawthorne)