The Russian currency has unexpectedly dropped for the sixth day against the U.S. dollar nearly reaching its weakest level since the end of May, despite one of the factors that domestic business media often cited as crucially important in ruble’s exchange rate formation, namely, preparations of wide array of institutional taxpayers for the December tax period, when exporting companies will step up sales of foreign exchange earnings to pay taxes. The ruble fell 2.9% in Moscow yesterday, on December 19, to trade at $66.5900/$. The ruble shed 2.4% against the euro to 70.7875 and 2.6% against the yuan to 9.5220. The index of Russian government bonds also posted a decrease of 0.1% to 130.44.

The Russian currency has broken through an important support level of 65 rubles per dollar, so right now the biggest question if, technically speaking, its support level will convert into its resistance level going forward. If the dollar consolidates above this level (this is possible if the activity of exporters, despite the upcoming large tax and dividend payments, remains low), it will continue to strengthen and reach 67 rubles per dollar, and possibly even up to 70 rubles/$ pretty soon.

Although the likelihood of such a scenario increases, it is still not considered basic by the majority of big Fx dealers. CBR and MinFin may turn from the ruble punishers into its saviors by ordering that domestic exporters to sell their foreign trade proceeds into forex exchange. They may opt even deciding for themselves by thinking that foreign currencies, which are now not welcomed by banks due to international sanctions, are already too strong to wait for even a more attractive exchange rate.

According to some estimates, however, at the end of December and the first half of January, exporters will have to pay dividends and taxes totaling 1.8 trillion rubles, which is quite a substantial total amount. Therefore, towards the end of the current week, exporters are likely to sharply increase the supply of foreign currency, which will allow the ruble to stabilize in the range of 64-65 rubles/$.

Let’s review other important factors traditionally affecting the ruble exchange rate. After a tumultuous week, Brent oil is finally adding a couple percents towards a stickier $80+/ barrel levels. Oil is rising on news from China to apply all measures to ensure economic growth and news about the U.S. transition to replenish their SPR (Strategic Petroleum Reserves).