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Trading signals! | Hello, Yuan at 15₽
Hello everyone. On October 11, 2024, new (estimated) macroeconomic data on the balance of payments of the Russian Federation for the third quarter of 2024 appeared on the official website of the regulator. Traditionally, I based my analysis on this data. Create a CNY/RUB forecast for the next (current) quarter.
Let's see what has changed over the last reporting period. To do this, let's look at the chart of such an important indicator of the balance of payments as the current account (CAO).
Costs of services in the third quarter of 2024 (compared to the previous quarter) decreased by 9.1 - 17.4 = -$8.3 billion or -47.7%.
A similar decrease in STO in the second quarter of 2024 was 17.4-24.1 = -$6.7 billion or -27.8%. (almost twice as much). All these are clearly negative factors for the ruble.
Now let us analyze the dynamics of changes in such indicators as export (E) and import (I) to find out what caused the significant reduction in total costs - 8.3 billion rubles.
Let me clarify right away that here in our calculations we will use the total value of exports and imports. In other words, we will add the amount of exports to the trade balance and the amount of exports to the balance of services. We will do the same with imports. Usually we combine them into one group called "Goods and Services" (GS).
Therefore, if you carefully analyze the dynamics of changes in the total volume of exports and imports, you can discover several interesting facts!
Look, in the third quarter, total exports increased by: d(E) = 118.6 - 115.3 = +2.7 billion dollars. Over the same period, total revenues have already increased by d(I) = 99.6 - 89.2 = +10.4 billion dollars.
Thus, it is clearly seen that in the third quarter of 2024, import growth grew faster (more) than export growth. The difference is: d(E) – d(I) = +2.7 – (+10.4) = –7.7 billion dollars.
That is, the decrease of -$8.3 billion in the third quarter of 2024 occurred primarily due to the fact that imports grew faster than exports (-$7.7 billion, 92.7%).
And since imports are growing much faster than exports, the demand for money by importers will exceed the money supply of exporters. Therefore, this will inevitably affect the price of the ruble. In other words, we can assume that the price of the yuan will rise in the fourth quarter of 2024. This is my conclusion.
Now, to move directly from the conclusion to the CNY/RUB forecast for the fourth quarter of 2024, let's arm ourselves with the information obtained earlier and combine it with the technical picture of the currency pair.
As you can see, the chart highlights the price values of the main extremes recorded since the first quarter of 2022 (rounded by shadows).
From the third quarter of 22 to the third quarter of 23, the yuan rose from 8 to 14 against the ruble. That is, 14-8 = 6 rubles (maybe "Ya" will do).
After this growth, fertilization began. First, it decreases from 14 to 12 (probably wave "A"). Then follows a rollback with growth from 12 to 13 (probably wave "B") and a new decrease to 11 rubles (probably wave "C" of the corrective zigzag "ABC").
So now I think the value 13 acts as a kind of median (middle) of a wider range.
Initially it was around 14-12 with an average value of 13. Then the price formed a new local minimum, reaching the mark of 11. So, if the value of 13 is actually a kind of median, then the upper limit of the new (wider) range is around the mark of 15₽ (13-11=2, 13+2=15).
Therefore, my forecast for the CNY/RUB exchange rate is 15 rubles by the end of the current (IV) quarter of 2024. Of course, all this is provided that the geopolitical situation does not deteriorate sharply during this period and no other force majeure events occur. Anything can happen.
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I wish you all good luck and success! The presented material is the subjective opinion of the author and is not an investment recommendation.