/Pogled.info/ Russia has achieved such a strong exchange rate of the ruble that the authorities can easily lift the anti-crisis measures. The requirement for exporters to sell half of their foreign exchange earnings has already been abolished. This measure was needed to stop the currency panic, but it has long since been exhausted. At the same time, the Central Bank can symbolically return the key interest rate to 9.5%, which was in February. All this should help the ruble to turn around and start losing weight.
The Russian ruble has strengthened against the dollar so much that it has even become the best currency in the world this year. The Central Bank of Russia and the government of the Russian Federation have begun to take measures to make the ruble exchange rate convenient for the population, the state and business. The strong re-strengthening of the ruble is dangerous because it could deprive Russian exports of competitive advantages. In addition, there are problems with the sale of currency in such large volumes and low imports – the demand for currency has fallen sharply.
Therefore, the Russian authorities have begun to carefully ease the previously imposed strict rules. First, the rule of compulsory sale of 80% of foreign exchange earnings was adjusted to 50%, then the sale period was increased from 60 to 120 days, then foreign exchange earnings from exports were allowed to be credited not only to foreign currency accounts in the Russian banking system, but also to all kinds of accounts in other countries.
The central bank, for its part, after a sharp rise in the key interest rate to 20% amid the imposition of tough Western sanctions, began to reduce it. But even the sharp decline in the rate of an unplanned meeting on May 26 from 17% to 11% did not lead to a weakening of the ruble. It was not possible to change the ruble’s exchange rate. Therefore, the authorities began to act more actively. Easing capital controls is this step.
“The compulsory sale of foreign exchange gains has been abolished as this measure is obsolete. And it was introduced temporarily to avoid further weakening of the national currency when the dollar exceeds 100 rubles. The panic in the foreign exchange market was avoided due to restrictions imposed by the Central Bank of the Russian Federation, and the ruble began to strengthen. In addition, imports fell sharply, leading to a drop in demand for foreign currency, “said Natalia Milchakova, a leading analyst at Freedom Finance Bank.
“The introduction of the mandatory sale of foreign exchange profits was an anti-crisis measure, but now there is no need for it. In addition, exporters of goods traditionally spend about 40-50% of foreign exchange earnings on taxes, another 20-30% can be converted for operational activities in the country, “said Vladimir Evstifeev, head of the analytical department of Zenit Bank.
It is worth noting, however, that the authorities left the possibility of changing the share of foreign exchange earnings on the mandatory sale. But now it will be determined by a government commission, in fact in manual mode – if, of course, required.
“This is being done to make this topic easier to administer. That is, in periods of calm, no restrictions or requirements will be imposed, but in a period of potential turbulence, this commission will manage the situation manually, “explains Evstifeev.
Another factor that could weaken the ruble is the reduction of the interest rate by the Central Bank at its meeting on Friday, June 10. However, no one predicts another sharp decline, as it was at the end of May. The majority agree that the interest rate will be reduced on June 10 by 1% – up to 10%, although experts do not rule out that the Central Bank may reduce interest rates to 9.5%. This would be extremely symbolic, because it would mean that Russia’s key interest rate returns to the level of February before the start of Russia’s special operation in Ukraine and the imposition of harsh Western sanctions.
“From tomorrow’s meeting of the Central Bank of the Russian Federation we expect a new reduction in the key interest rate, most likely a reduction of 1 percentage point to 10%. The main reason that will influence this decision, in our opinion, will be the slowdown in annual and monthly consumer price inflation in May. We believe that by the end of the year the basic interest rate can be reduced to 9-9.5% “, says Milchakova.
How will the ruble react to all these factors that put pressure on it? In fact, those who have not had time to buy dollars and euros at a low price should not panic. Experts do not expect the ruble to devalue sharply because of this news.
“In the short term, the ruble may depreciate slightly, but there are many factors that we predict will keep the ruble afloat throughout the summer,” Milchakova said. First, the behavior of imports, which fell by 50%, will not be affected by either the requirements for exporters in terms of foreign exchange earnings or the exchange rate.
“The main problems with imports are the complexity of logistics and the withdrawal of foreign companies from Russia. Establishing parallel imports and finding new suppliers of goods and services will take time. These are at least two or three quarters, “said Evstifeev.
High oil prices, low demand for foreign currency by the population and the lack of a budget rule (when excess profits are poured into the economy and stored in reserves) also help maintain the ruble’s exchange rate. Among the secondary factors are restrictions on cash and the shift of some Russian banks to the practice of negative interest rates on foreign currency accounts, Evstifeev added.
“Therefore, a new collapse of the ruble should not be expected, as happened in early March, the dollar rose to 80 rubles and more. Perhaps, if the budget rule is returned, the ruble will return to the corridor of 60-70 rubles per dollar, which obviously suits both exporters and the population. Until the budget rule is approved, we can expect that in the summer the dollar will fluctuate between 55-65 rubles, “said Natalia Milchakova.
Translation: V. Sergeev
IMPORTANT !!! Facebook limits us because of our positions! Share in your profiles, groups and pages and in this way we will overcome the limitations, and people will reach the alternative point of view about the events !?
Become a friend of Pogled.info on facebook and recommend to your friends
–
