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Saturday, October 22, 2016

Putin asked Medvedev to think about the problem of a “strong ruble”: waiting for the devaluation

President Putin held a working meeting with Prime Minister Medvedev and invited the Prime Minister to “think” what to do in connection with the strengthening of the ruble. How to understand concise instructions to GDP? We discussed with the expert.

photo: Gennady Cherkasov

Dmitry Medvedev in the answer has informed the President that the plan for this year pledged support for the real sector, small and medium entrepreneurs and non-oil exports, and the share of income from it is increasing. The Prime Minister also promised to consider all these factors when preparing the budget for the next three years. Decoding the remainder of the meeting on the Kremlin website was not published.

For comments, we turned to the Director of the relevant Institute of Economics, candidate of juridical Sciences Nikita Isaev:

– I believe that the fate of the ruble, the government needs to attend to a few before. But as they say, better late than never. What’s the matter? That today in the domestic economy inexplicable from a scientific point of view processes. Oil prices decline and the ruble, which is strongly associated with the volatility of raw materials, on the contrary, strengthened against the dollar. This is despite the fact that “American” is strengthening against all other currencies: the Euro and the Japanese yen.

How can we explain the behavior of the Russian currency? Honestly, I have a clear answer no. But it brings our economy a lot of problems. Currency revenues are converted to strong ruble and the country’s budget deficit appears, gaping holes. For the first half of the year across the country, we are 11% reduced previously planned expenses. Left only to social projects. But for their implementation, if this trend will continue, will have to borrow money from the Reserve Fund.

I believe that the measures of the weakening of the ruble and discussed the President and the Prime Minister.

And when, in your opinion, the ruble will begin to fall?

The most appropriate time — 3-4 quarter of this year, and specifically, after the elections to the state Duma on 18 September. The devaluation is likely to be 20-25 %, that is, the dollar will be in the range of approximately 80-85 rubles. Of course, to replenish the Treasury cash, but also to prevent a collapse of the national currency, it would be good to her gradual weakening to start now, not to postpone the case indefinitely. But the problem here is in the fact that Dmitry Medvedev headed by not only the government but also the party “United Russia”. And then you need to maintain a certain balance. To show the voters before the election that we have in the financial field, everything is pretty stable and predictable.

But all of this from time to time. The economy will not disappoint.

Rising prices and a falling ruble. Chronicle of events

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