/ world today news/ As of August 10, the Bank of Russia decided to temporarily stop buying foreign currency on the domestic market until the end of the year as part of the Ministry of Finance’s mirror regular operations related to compliance with the budget rule. The aim is to reduce the volatility of financial markets. We will talk about the exchange rate and the collapse of the ruble with the experts Lazar Badalov and Vasiliy Koltashov.
Last month’s statistics showed an unprecedented increase in sales of foreign currency on stock exchanges and banks in the country, amounting to 44.4 billion rubles. In addition, credit organizations became the main sellers of dollars.
According to the Central Bank of Russia, in July the value of the ruble against the dollar decreased by almost 2.3%. First of all, due to the pressure on the foreign currency of the reduced balance of foreign trade, as well as the small sales of foreign exchange earnings.
People saw the collapse of the ruble and began to slowly sell dollars. Most of the currency was sold through large Russian banks – about 28 billion rubles. Another 16.4 billion was withdrawn through non-exchange services, the Central Bank said.
In addition, the volume of loans granted to Russian citizens in the last month exceeded 1.5 trillion rubles. This is 1.8 times more than the indicator of a year ago.
The auto lending and post-lending segments showed the highest growth rates and record values on the back of pent-up customer demand.
At the same time, the money lending segment stagnated, including in the context of strict measures by the Central Bank to limit the growth of the unsecured credit market.
Economists believe that the weakening of the ruble by 30% since the beginning of the year will add 1.5-3% to inflation. The Higher School of Economics (HES) Development Center’s forecast for annual inflation was raised to 6%, Central Bank interest rates to 10% by the end of the year. The Central Bank itself estimates the effect more modestly – +0.5-0.6% to inflation when the exchange rate weakens by 10%.
Commenting on these figures, the presenter of First Russian Yuriy Pronko noted that in reality, people who come to supermarkets and shops, pay for certain goods and services, see not 1.5% or 3% growth. And not even 5%. And they see multiple price increases.
“Then why is the current devaluation of the ruble not causing this trepidation in the financial authorities who are responsible for the social sphere? After all, we are actually talking about the upcoming rise in inflation,” he said.
The presenter discussed this topic with the financier Lazar Badalov and the economist, director of the Institute for a New Society Vasily Koltashov on the air of the program “Tsarigrad. Main”.
The people suffer most of all.
According to the financier Lazar Badalov, the regime of freely floating exchange rate of the ruble actually contributes to macroeconomic stability. But in the end, the end user suffers the most. Because the prices of different groups of goods affect people’s purchasing power.
“Suppose it is a fizzy drink imported from abroad and its price has increased several times. But is that all,” he asks.
“There are goods that are produced in Russia, but the raw materials and components are bought from abroad. This is a production chain. And there will be some growth there as well,” said the Constantinople source.
When calculating inflation, Rosstat will include different groups of goods in its index in a different way, noted Badalov. And some positions will not even be included in this list.
According to him, the difference between how much household appliances and cars will become more expensive will be obvious. But it is clear from the experience with the regime of freely floating exchange rate of the ruble that the weakening of the ruble will lead to an increase in inflation.
“The indicators that the Central Bank informed about at the beginning of the year will probably not be achieved,” he said.
“But we have already come to terms with the fact that the Central Bank of Russia conducts inflation targeting and a policy of a freely floating exchange rate of the ruble. And it is unlikely that it will give it up,” continued the expert.
“Here we can only state that in the future, sometime, not under the current leadership of the Central Bank, but still the Central Bank will change its approaches to the implementation of the monetary and credit and currency policy”, concluded Badalov.
According to the host Yuriy Pronko, it is hard not to agree with the expert’s opinion. But it is unlikely that people will get used to such an order of things.
Pronko emphasized that to extremize the households in this situation and then to say that all assumed budgetary and state obligations are fulfilled is the least cunning.
“If you don’t fall out of the zone of the Russian literary language,” he added.
The situation is like a joke.
The director of the Institute for a New Society, Vasiliy Koltashov, in an interview with Tsarigrad, noted that it is impossible to talk about inflation targeting without humor.
“I remembered an old joke about targeting. “What is targeting? It’s when you take a dollar at thirty and then it becomes 60,” he said.
“So this is a referral from the Bank of Russia. Nothing changes, only the course changes for the worse,” said Koltashov.
As prices rise, so does the price of the food basket. According to the expert, this is particularly noticeable in the prices of chicken and pork, as they are in high demand among buyers.
“Chicken and pork. These are the two indicators that excited many in the past week. People saw the price tags and analysts saw the dynamics. And the blow to the demand for these goods as a result of the almost annual devaluation of the ruble turned out to be very serious,” he said the interlocutor of “Tsarigrad”.
Because of the rising prices, people cannot afford to buy beef or lamb or any kind of cheese. They began to buy chicken or pork more often. It is the most accessible and cheapest meat. What accelerated the rise in prices in this segment, said Koltashov.
“Rising prices is what awaits us. Everything that is cheap will become more expensive,” he declared.
“Perhaps the government will take measures and limit the increase in the price of pasta, bread, milk. But in general, if we talk about meat or other locally produced products, this is inevitable as a result of this devaluation,” he is sure.
The collapse of the ruble
The weakening of the ruble, according to Koltashov, has been observed for the last 2-3 months. In addition, the collapse of the ruble occurred at the moment when the prices of goods on the world market began to rise. The same oil now costs about $85 a barrel, he said.
“The ruble collapsed at the moment when world commodity prices started to rise. It was understandable at the time,” he said.
“Because there was a global price depression: low prices for wheat, low prices for oil, gas, etc. It is clear that it was difficult for exporters as well. But the situation began to change. And now what?” said Koltashov.
He drew attention to the fact that central banks in the West are raising interest rates, realizing the value of their money. Which actually further suppress their own demand. They see no point in waiting, but simply weaken the ruble, the expert explained. But in terms of population, isn’t that sabotage?
“Now world prices will rise. And that will allow domestic prices to rise as well. And, of course, people won’t see 6% inflation. There will be more, there will be growing discontent. And who is to blame,” he asks.
The expert emphasized that people are not interested in who runs the Bank of Russia there and how it differs from the Ministry of Finance or the government.
But the main thing is that the government, for example, gives industrial mortgages, while the Bank of Russia and the Ministry of Finance stifle demand. And in this scenario, government turns out to be a battleground. Because, as Koltashov explained, the struggle is between completely different approaches to the economy.
“This neoliberal approach to the economy, which is the basis of the expected or already occurring inflation, which we see as an increase in the prices of some basic products, is a consequence of the formula that in any incomprehensible situation ‘devalue the ruble,'” he said.
“And besides, this is a blow to those who advocated that Russian companies work in rubles. They fixed profits, booked in rubles and saved in rubles. But how to save a deposit in rubles at 8% if the devaluation is 80% per year Koltashov said.
People are afraid to spend money
Another point that the expert drew attention to is the increase in the retirement age. With such an initiative are spokesmen of the Higher School of Economics (VII).
“Speakers from the Graduate School of Economics proposed that the retirement age should now be raised. And the format in which they offer it is like the preparation of some political events,” said Koltashov.
“Since the June 24 uprising failed, it means that now we will try to change the public sympathies and the scales will not be in favor of the president. Therefore, we will push a number of things that will lead to destabilization of the situation in Russia,” he said he.
“And when I say that this is sabotage, this is not a petty desire for mischief. But very serious actions,” the expert added.
According to him, since the middle of last year, people started buying more currency. But not to invest these funds in real estate or the purchase of industrial goods, in some household consumption, in the service sector.
No, this money was withdrawn from circulation and turned into “treasure”, into reserves. Which, according to Koltashov, is good for Western currencies, but bad for the Russian economy.
“Everyone sees this example. Everyone understands that if it gets worse, then you have to insure yourself, you have to have some currency reserves,” said Koltashov.
“There are anxious expectations in society because of the exchange rate and the collapse of the ruble. It’s not even a devaluation, it’s just a collapse of the ruble,” he said.
The expert added that the “collapse” refers to the fall of the ruble by 30%. And if the fall of the ruble was 80% per year, then it is not at all clear how to understand this. As part of inflation targeting?
“Therefore, many problems arise, one of which is the avoidance of investment, consumption and other things. Because the situation is so incomprehensible that it is better to hide the money, sit, tremble and wait. If we talk only about one economic aspect of the process,” he concluded.
Translation: SM
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