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MOSCOW, July 30. /TASS/. The Russian national currency’s latest fall to the 60-ruble mark against the US dollar - a record-low since last March - is fraught with no major risks for the economy. Given the Central Bank’s accumulated anti-crisis experience one should feel no fear the ruble may plummet overnight, polled experts have told TASS. The Central Bank’s declaration it had stopped purchasing hard currency for building up the gold and foreign exchange reserves has already "put much muscle" into the ruble.
On May 13 this year the dollar was selling for less than 50 rubles, while at the beginning of this week it was above 60 rubles. Before the opening of Wednesday’s exchange trading the Central Bank declared that on Tuesday it made a decision to suspend currency purchases for the gold and foreign exchange reserves, high volatility on the market being the main reason. On Wednesday, the Central Bank reduced interventions from the usual $200 million dollars a day to $160 million. Immediately after the CBR’s statement the ruble firmed to 58.81 rubles per dollar.
"The ruble’s 20%-fall against the dollar from 50 rubles to 60 rubles was strongly felt, of course. Regrettably, such volatility is typical of the national currencies of export-dependent economies, such as Russia, Brazil or Kazakhstan. We are not secure from the ruble’s further fluctuations within a range of 55 rubles to 65 rubles per dollar," the head of the Vneshtorgbank’s supervisory council, former CBR governor Sergey Dubinin, told TASS.
"It was the changes on the market of hydrocarbons, observed over the past few weeks, and the falling oil prices that triggered speculative ruble sales. The exchange rate of the ruble will now get back to normal slowly but surely. Its fluctuations pose no risks to the economy, although they may create more problems for economic entities pegged to international settlements in hard currencies," Dubinin said.
Vneshekonombank’s strategic analysis and research director, Vladimir Andrianov, believes the ruble’s smooth devaluation is the regulator’s well-considered decision.
"This measure surely contributes to budget revenue growth," Andrianov told TASS. "External factors, such as falling oil prices, have played a role in the ruble’s weakening, too. The barrel of Brent crude has been on the decline for two weeks in a row to $54. While in many oil producing countries the national currency’s exchange rate does not depend on the price of oil, in Russia these two factors are closely correlated," Andrianov told TASS.
"Another major test for the ruble is due soon. Wednesday’s session of the US Federal Reserve provided no hints as to the outlook for a rise in the key rate. Market participants are curious if some sort of surprise is due by the Federal Reserve’s meeting in September. If the Federal Reserve declares a key rate rise in September, the dollar will soar to above 60 rubles. I believe the CBR is properly prepared for that. The trend is bound to change. All financiers are expecting that," Andrianov said.
"As for the claims the stock market crisis in China is a factor working against the ruble, I do not believe this. It is a purely local phenomenon occurring once in 5-7 years. The stock market fall and subsequent growth follow each other in a spiral-like fashion. We have been able to see that in South Korea and in Singapore," Andrianov said.
"I do not rule out a smooth decline of the ruble’s rate, but there will be nothing like the steep fall of December 2014. The CBR has learned the lesson and it will not permit speculations on the money market again. The regulator will keep the situation under control with reliance on the available reserves," Andrianov forecasts.
And the president of the Association of Russian Banks, Garegin Tosunian, remarks that although replenishing the country’s gold and foreign exchange reserves is an important task, it would be not very logical for the regulator to go on purchasing $200 million a day, thereby supporting another country’s currency. "It is very good the Bank of Russia has arrived at the decision to suspend currency purchases to help the ruble get firmer," Tosunian said.
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