At the meeting, Putin emphasized that one of the main problems in the Russian economy is now related to the acceleration of inflation. “The main factor here is <...> “This is the weakening of the ruble,” the head of state explained.
According to the President, it is necessary to clearly understand the reasons for the weakening of the ruble so that all necessary decisions to stabilize the economic situation can be taken in a timely manner.
“I believe that the government and the Central Bank will work professionally and professionally. <...> “I accept,” Putin said.
What precautions can be taken?
The Russian government apparatus told socialbites.ca that “the necessary decisions to implement the president’s instructions are currently being worked out.” At the time the note was published, the Central Bank and the Ministry of Finance of the Russian Federation did not respond to the request.
At the Eastern Economic Forum, Russian Vice President Maxim Oreshkin said that the government and the Central Bank are working on a package of measures to limit capital outflow and some decisions have already been taken. Additionally, VTB chairman Andrei Kostin suggested introducing a limit on withdrawals from Russia in rubles. Deputy Governor of the Central Bank Alexey Guznov confirmed that discussions on the transformation of monetary regulation have begun, various elements are being discussed. The head of Sberbank, German Gref, said that the fair exchange rate for the dollar can be considered the range of 80-85 rubles.
Deputy Chairman of the Financial Market Committee of the State Duma Oleg Savchenko told socialbites.ca that the most effective way to strengthen the ruble exchange rate would be to increase the volume of Russia’s non-commodity exports and, accordingly, increase the sale of foreign currency. earnings in the country.
“We’re talking about almost all categories of non-resource exports, including grain and cars,” he explained.
According to Savchenko, prohibitive measures, including restrictions on withdrawing money from accounts in Russian banks and restrictions on withdrawing capital from abroad, appear to be less effective.
Former deputy chairman of the Central Bank of the Russian Federation, Sergei Dubinin, in a conversation with socialbites.ca, said that the issue of selling foreign currency earnings will be resolved at the level of an agreement between the authorities and exporters, that is, no mandatory standards will be introduced for companies.
“There is already an agreement to increase the sales volume of the revenues. “In my opinion, a new agreement will be made to increase sales,” he said.
Dubinin, a former deputy governor of the Central Bank, also did not rule out that the regulator will impose restrictions on withdrawing capital from abroad.
He noted that Russian exporters now receive most of their foreign exchange earnings in rubles and yuan, so increasing foreign exchange earnings sales in the long run is not as effective. Dubinin explained that both measures will therefore be valid until the next tax period, that is, over a six-month horizon.
Sovcombank chief analyst Mikhail Vasiliev admitted that authorities could informally negotiate with exporters to increase the sale of foreign currency earnings in order to stabilize the ruble exchange rate within a certain range. According to him, this could be in the range of 90-100 rubles per dollar.
According to Central Bank statistics, exporters sell approximately 80 percent of their foreign exchange earnings in the domestic market.
“Increasing this share to 100 percent is more likely to have minimal impact. “Perhaps it would be more effective to establish mandatory foreign exchange sales volume for the largest exporters depending on the level of energy prices,” said Vladimir Evstifeev, head of the analytical department of Zenit Bank.
However, Central Bank Governor Elvira Nabiullina said at a press conference on Friday that restrictions on capital withdrawal and standards on foreign exchange earnings will not strengthen the ruble exchange rate.
According to Dubinin, authorities are unlikely to return to a fixed exchange rate to stabilize the Russian currency.
Associate Professor of the Basic Department of Financial Control, Analysis and Audit also says that the ruble exchange rate can be supported by foreign exchange interventions of the Central Bank (buying and selling foreign currency in the domestic market). Moscow City Control Department, REU. GV Plekhanov Dmitry Osyanin.
“It is now difficult to find market measures that will increase exporters’ foreign exchange sales and reduce capital outflows. Therefore, some measures will need to be combined to strengthen the ruble. For example, the introduction of mandatory sales of up to 80 percent of foreign exchange earnings, some measures to limit ruble loans to exporters and the reduction of the $1 million limit on individuals’ transfers abroad,” summarized Viktor Tunev, head of corporate business analytics. DOM.RF Bank.
Koshelev added that these regulations could further limit the conditions for withdrawing capital to exit foreign companies, reduce the withdrawal limits for individuals and relimit the conditions for paying dividends to foreign companies.
According to Dubinin, increasing the interest rate of the Central Bank now indirectly affects the ruble exchange rate.
“The increase in the interest rate does not directly affect the ruble exchange rate due to the absence of the current traders factor, which has already been proven in the last two interest rate increases,” said Maxim Timoshenko, Director of the Department of Financial Operations. Russian Standard Bank markets.
What will happen to the ruble?
According to Vasiliev, it is no longer known at what level the ruble exchange rate is comfortable for Russian officials. For example, the Ministry of Economic Development’s forecasts for the end of the year include an average exchange rate of 94 rubles per dollar. Therefore, in his opinion, the instructions of the President of the Russian Federation may have been aimed at stabilizing the ruble exchange rate, that is, stopping the weakening of the Russian currency and strengthening it.
The Bank of Russia opposes administrative measures to regulate the exchange rate, considering them ineffective.
“The degree of impact on the ruble exchange rate will depend on the measures ultimately taken. “Considering that the President of the Russian Federation said that there will be no “drastic moves” in the field of exchange control measures, we believe that the measures will be stabilizing for the ruble,” Vasiliev said.
He added that in the base scenario, the ruble exchange rate will remain in the range of 90-100 rubles per dollar until the end of the year. Vasiliev’s forecasts for the fourth quarter include an average exchange rate of 98 rubles per dollar, 106 rubles per euro and 13.3 rubles per yuan.
Source: Gazeta
Ben Stock is a business analyst and writer for “Social Bites”. He offers insightful articles on the latest business news and developments, providing readers with a comprehensive understanding of the business world.