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Gradual devaluation predicted to Russia’s ruble

December 06, 2013, 12:38 UTC+3
There has been an increasingly pessimistic outlook on the Russian ruble, the Nezavisimaya Gazeta newspaper writes
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MOSCOW, December 06. /ITAR-TASS/. World Bank’s Country Director for the Russian Federation Michal Rutkowski has said that there will be no devaluation of the Russian ruble in the foreseeable future, and inflation in the country will not exceed the level projected by the Central Bank of Russia (CBR). Meanwhile, in the view of authoritative bankers, the currency rate will fall to 37 rubles for $1.

There has been an increasingly pessimistic outlook on the Russian ruble, the Nezavisimaya Gazeta newspaper writes. Just a week ago, government officials talked about a barely noticeable weakening of the ruble. And economists warned that by the end of 2014 the dollar would rise in Russia to about 35.4 rubles. Now the forecasts have changed. Reputable bankers expect that by the end of next year the currency rate will be closer to 37 rubles per dollar. Such failures for the national currency had been rare even in the most severe crisis periods of 2008-2009, emphasizes the publication.

In 2013, the ruble has weakened at least 10 percent against both the dollar and the euro, the newspaper says. In 2014, it will lose another 10 percent, Chairman of the Board of Directors of MDM Bank Oleg Viyugin said on Echo of Moscow Radio. His forecasts, as a rule, are taken seriously by the colleagues and officials.

The fall of the ruble is not yet sharp, but noticeable, Viyugin added. “The reason is clear. Russia’s payment balance surplus is not high,” he said. Warning that there was no use in making any forecasts, the banker then nevertheless shared with the public the results of his calculations. They suggest that in 2014 the ruble rate may fall another three points to 36.4 rubles for one dollar, that is, it will get closer to 37 rubles for one dollar.

So far, nobody has made such forecasts either in the government or the expert community, stresses Nezavisiaya Gazeta, adding that the dollar cost slightly more than 36 rubles only during the most acute crisis period — in February 2009.

The Novye Izvestia newspaper notes that it is difficult to forecast the ruble rate movement, as it is influenced not only by the objective factors, but also the policy pursued by the authorities. “In the period from August to November, the CBR sold some 20 billion dollars, trying to stop the weakening of the national currency. On the basis that the country has 500 billion dollars in reserves, it is possible to maintain the current ruble rate. The question is how reasonable is such a policy,” head of the monetary policy division of the Centre for Macroeconomic Analysis and Short-Term Forecasting Oleg Solntsev says.

A weak ruble is an advantage for the country’s budget, writes the Komsomolskaya Pravda daily. The main profit to the treasury comes from oil sale. The payments are made in dollars and then the proceeds are converted into rubles. So, the higher the rate of the “greenback,” the more rubles flow into the budget. Russian manufacturers also benefit from a weak ruble. Because the higher the currency rate, the higher the cost of imported goods, which means that domestic companies get a competitive advantage on the market.

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