The situation with the ruble exchange rate has not yet affected prices. But the fall of the national currency inevitably leads to high inflation.
Photo: REUTERS
There is no need to believe in conspiracy theories, the ruble is falling for natural reasons, and the authorities are not helping it in any way. Elvira Nabiullina, head of the Central Bank, said so, speaking at the Bank of Russia financial congress on July 6.
Yes, that’s hard to believe (Elvira Sakhipzadovna, and not conspiracy theories). After all, no less than on July 5, when the ruble exchange rate had long and confidently been declining, our authorities gave it additional acceleration. The Ministry of Finance announced that in July it would more than double the sale of foreign currency on the stock market. And the less currency is exchanged for the ruble, the weaker its exchange rate – this is the law of economics. From this we can conclude: the Ministry of Finance does not want the ruble to strengthen yet. And only from a news that the Ministry of Finance will reduce currency sales, the fall of the ruble accelerated even more. He is sensitive and gentle, and they also say that he is made of wood.
Why doesn’t the budget really need a strong ruble now? This question was asked by the experts of the American agency Bloomberg. And they came to the conclusion: a weak ruble will help increase treasury revenues, which are noticeably below costs.
Now we explain everything to you. But first, let’s remember that the ruble has been falling slowly since last fall, then the dollar was slightly above 60 rubles. However, in recent weeks, the decline has accelerated. Two months ago, the dollar was worth 76 rubles, and on July 6 it jumped to 93. The euro rose from 84 to 102 rubles in the same period. There are several reasons, but perhaps three main ones.
1. Attempted “Wagner” rebellion
Oh, that was worrying. And when the Russians are anxious, many have a reflex: buy the currency, but more! This is what many did on a directly restless Saturday morning, June 24.
And in the economy there is a law: when the demand for a currency grows, its price also rises (remember this law, we will continue to need it). What happened. A week after the events surrounding the PMCs, the dollar rose from 84 to 88 rubles, the euro from 91 to 97.
2. Exports go down, imports go up
Last year we had high income from the export of resources. Oil, gas, metals were very expensive. Foreign exchange earnings came to us like a river. And that is why the dollar and the euro were then cheap – 60-65 rubles each.
– The large-scale strengthening of the ruble exchange rate last year was perceived by many as a victory over circumstances. But we must honestly admit that this was the result, first of all, of a sharp increase in exports and a decrease in imports. Now, if we look at the dynamics of the exchange rate, it is also due to a large extent to foreign trade”, explained Elvira Nabiullina, head of the Central Bank.
Now the situation has changed.
– Prices of oil and other Russian exports on the world market remain at low levels. And besides, they tend to decrease, – explains the director of the Socio-economic Research Institute of the Financial University of the Government of the Russian Federation.
As a result, the country receives less and less foreign exchange from exports. And imports are on the rise, and suppliers need more and more dollars, euros and yuan to buy products abroad. And here we remember the rule: when the demand for a currency grows, its price also rises. Here it is, the main reason for the fall of the ruble.
3. State budget deficit
The same conspiracy theory we’re told not to believe. But still, vague suspicions torment us.
The fact is that our budget is in deficit: according to the results of the first quarter, expenses exceed income by 2.4 trillion rubles. Fewer and fewer currencies come from imports. But the weaker the Russian currency, the more rubles you can get for every dollar (euro, yuan, tugrik) that enters the country. After all, it’s one thing if every dollar that comes to Russia turns into 70 rubles. And quite another if it costs 100 rubles. This makes it easier to cover the deficit. This is exactly what the Bloomberg experts suggest. And the Ministry of Finance, which is responsible for calculating budget revenues and expenses, is in no hurry to support the ruble exchange rate and only adds fuel to the fire.
And how not to believe in conspiracy theories? ..
QUESTION EDGE
What will happen next?
The situation with the ruble exchange rate has not yet affected prices. But the fall of the national currency inevitably leads to high inflation. Therefore, sooner or later the authorities must give their opinion. For example, after all, start selling currency on the stock exchange, and thereby support the ruble exchange rate.
– My opinion is that the Bank of Russia will intervene soon enough. For a short time, everything can be: both 92 and 95 (rubles per dollar, – Ed.). But, I think, then they will go to 88-89 and everyone will be delighted, believes Evgeny Kogan, a professor at the Higher School of Economics.
– I think that the option for the dollar to remain in the corridor of 85-95 rubles is for a long time. At least until the end of the year, predicts Aleksey Zubets.
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“The floating ruble exchange rate is a blessing”: the head of the Central Bank explained why conspiracy theories should not be believed
On July 6, he spoke at the financial congress of the Bank of Russia (details)
