MOSCOW, March 13. /ITAR-TASS/. As the Russian ruble keeps falling, banks sell one US dollar for 36 rubles and one euro for more than 50 rubles (vs. 30 rubles per dollar and 40 rubles per euro last year), and fiscal experts say the Russian currency is at its all-time low.
“The fall of the ruble is caused by devaluation expectations among people,” Alexander Khandruyev, former Deputy Chairman of the Central Bank of Russia, said. “Two defaults have occurred in the country within one century — in 1918, when it refused to pay the tsarist government’s debts, and in 1998, when the Soviet Union and Russia re-denominated the ruble four times in 1948, 1969, 1991 and 1998, and each time people lost their ruble savings. This drives up demand for hard currency now,” he said.
Banks respond to this demand by selling cheap the currency they bought on the currency market and making a profit. In other words, they are simply cashing in, the expert said.
The ruble’s fall was triggered by the Central Bank’s press release of January 13, which said that the Bank was refusing to regulate the exchange rate, thus allowing the ruble to free-float. The market responded immediately, and foreign currency rates started soaring. The ruble’s fall has already pushed the prices up. “This situation was spurred by exporters’ interests and growing budget revenues,” Khandruyev told Ogonek magazine.
Experts questioned by Komemrsant Vlast assess the situation differently. “I am confident that the Central Bank will not allow a serious fall of the ruble. Our currency reserves are quite large now and allow us to smooth over ups and downs in the exchange rate. I see no serious reasons for an economic crisis even though there are lots of problems in the economy,” First Deputy Duma Speaker and former Deputy Prime Minister Alexander Zhukov said.
“I feel sorry for the ruble, and I feel sorry for our savings. But the crisis is around. The financial situation in America is a bit better, but it is not the case in Europe. I think the crisis will continue for the majority of countries for five or six more years. And this means that all currencies, which are not reserve and are based on mono-product economies, will lose in value. The ruble is falling because of these processes and because of political tensions with Ukraine,” Yevgeny Yasin, academic supervisor at the Higher School of Economics, said.
“I believe in the ruble. Short-lived fluctuations, including those caused by political processes, are an inevitable part of the globalizing world, and we should not pay attention to constant fluctuations,” Kirov Region Governor Nikita Belykh said.
“The ruble may fall for some time but will stablize eventually. It is a rather strong currency, and we can look into the future with confidence,” Igor Rudensky, Chairman of the State Duma Committee on Economic Policy, said.
“We monitor a large number of different businesses and see that many have started losing their clients, it is not the right time to have fun now when the number of buyers is decreasing so dramatically. Mass layovers are underway, and entrepreneurs think about how to hold out for the next six months,” Yelena Andreyeva, president of a holding of private security companies, said.
“Public trust in the ruble has been waning over the past several months due to the political situation, which market players believe increases risks. One of the reasons for this is the flight of capital from the country. Possible EU sanctions against Russia and the growing standoff will further increase the risks, and capital is unlikely to flow into our country,” Sergei Dubinin, Chairman of Vneshtorgbank’s Supervisory Board, told Itar-Tass.
“I expect no dramatic fall of the ruble. The Central Bank had to interfere to shore it up, and the ruble will strengthen in the medium term. Signs of stabilization are already there, and it has actually begun,” he said.
“In the long term, the ruble’s exchange value will depend on the competitiveness of the Russian economy, which will have to overcome dependence on the oil and gas sector,” Dubinin said.
Former Minister of Cconomy Yevgeny Yasin agreed with him, “Russia is moving from industrialization to innovative development, where the main factor of growth is not cheap mineral resources, but innovations. This is a different system, and whether we will keep falling or will start growing, will largely depend on how fast we find an appropriate model of development,” Yasin said.
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