We fell 15% in the euro currency during the month and will likely continue to fall. Today, Central Bank Governor Elvira Nabiullina reminded at the Finance Congress that the Central Bank has been targeting inflation, not the ruble, for many years. In other words, it does not enter into the formation of the exchange rate, it keeps the prices within the limits they set. In fact, he handed the ball over to the government, saying that the ruble fell as export earnings fell. And that’s what the government is doing. So what else can the government do here?
We know world prices for oil and gas. They’ve been falling lately. As a result, the country’s foreign exchange income decreases. The only thing that can be done is to compel exporters to return their foreign currency earnings back to the country.
We have a glass swap for the dollar and it’s too small for the euro now. There are very few applications due to sanctions, most are simply blocked. Any forceful movement rushes out of such a corridor and drives it powerfully up and powerfully down. The presence of new exporters who have to sell their foreign exchange earnings will fill the glass and soften these strong fluctuations.
What can the Central Bank do? There is no doubt that interest rates will be increased. +0.5% was spoken but now it is clear that it will increase by 1%. This will calm speculators who are currently pushing the ruble up a bit. The Central Bank can intervene. When we made interventions with cross ratios, we had precedents. That is, you can sell more yuan and lower the yuan-ruble ratio.
This should lead to the fact that the dollar, ruble, euro – all this should go in the normal direction. But our Central Bank does not want this very much.
First, it sees it as a deviation from inflation targeting rather than the exchange rate. The second is the squandering of our not very rich gold and foreign exchange reserves. And it is not a fact that intervention through cross-rates will lead to strong stabilization.
So the only thing left to do is to make verbal interventions in forums and meetings, raise the rate and wait to see if exporters will have to sell the proceeds.
Our state could not let foreigners out either. There is a commission that approves transactions for the withdrawal of a company from hostile countries from Russian assets. Such exits are fraught with the fact that foreigners create large orders for the purchase of foreign currency when they are sold, and Russian assets – for rubles. Buy and sell rubles. There is a rather opaque mechanism here. Some are released, some are not. Somehow they agree with them, thus prolonging the purchase of foreign currency. Based on our gold and foreign exchange reserves, you may not issue bonds or issue bonds of any kind to them. This will reduce the pressure on the exchange rate.
Globally, we are moving towards 110 rubles on the euro course. We will probably stabilize there. I do not believe in apocalyptic scenarios like the euro for 150 rubles. The main thing is not to rush to buy currency in panic, because buyers now receive large spreads. And this is not alarmism and not “everything is lost”.
In principle, the circulation of cash in dollars and euros in Russia can be limited by Western sanctions. They also knew the number of banknotes brought here in bulk on pallets. Therefore, these invoices were cancelled. So buy gold. I recommend it to everyone. Gold has served humanity for five thousand years and will serve another five thousand years. Gold protects against the fall of the ruble.