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Sunday, February 18, 2018

The Kremlin wins the ruble

On too strong ruble has voted Vladimir Putin and his aide Andrei Belousov. And the head of the Central Bank Elvira Nabiullina said that the Central Bank to influence the exchange rate of the national currency does not intend to. Meanwhile, currency exchange captures just what I’m talking about from the Kremlin: the ruble down from the conquered peaks. What’s more: Economics or politics?

photo: Natalia Muslinkina

The first Association that came to me after reading the statements on the ruble, which shared with the audience the President Vladimir Putin and his assistant Andrei Belousov: “Priests screwing Kozlevich.”

Let me remind you: Putin gently but clearly told Prime Minister Medvedev about the incident the strengthening of the ruble and the need to consider this factor when preparing a budget the three-year period. Belousov, in turn, firmly said that “the ruble works in the negative” because its course is excessively strengthened. He noted that as a result of reduced revenues and aggravated budget problems and reduced the competitiveness of Russian industry. And directly stated that to change such a situation “there is a very large Toolbox of tools”, which are in the hands of the Central Bank and the government.

Who are the “priests”, of course. And who are they screwing? At first glance, – Elvira Nabiullina. Although the ruble may impact the government and the Ministry of Finance, but the main tools in the Arsenal of the Central Bank.

But Elvira did not take a political pause. She said the regulator will not affect the ruble. Central Bank will not abandon the floating exchange rate, which in itself is a built-in stabilizer of the economy.

Then easily start to develop the theme of contradictions among the key figures of the Russian economic policy, the pressure of the Kremlin on the Bank of Russia can recall those long climbs with words, when given the opportunity to level criticism at the managers of the Bank of Russia and their policies. Turn up the heat from behind the scenes.

But, in my opinion, this is not the trail. At least for now. In the role of Kozlevich spoke, the ruble itself. Words Belousova and, of course, first and foremost Putin is what is called “verbal interventions”. Their result demonstrate the results of trading on the foreign exchange market after the resounding bells of the ruble,” performed by Vladimir Putin. July 21, for example, the ruble-in the day lost almost 1%. Wednesday and Thursday, the ruble fell compared to the height, taken July 18, 2.3%. So I was right, last time I wrote about last chance to buy cheap dollars. The chance was, but now melted.

Of course, affected by the decline in oil prices, but the whole month of July the ruble could this trend be ignored. The reasons, supported him upstairs, – the payment of dividends by companies exporting, the next season of payment of taxes by them, the attractiveness of loans OFZ including for non-residents has not exhausted itself, and the ruble turned around. Enough verbal interventions.

Verbal intervention – world practice. Suffice it to recall how carefully, with a magnifying glass in the hands of the markets learn the statements of Janet Yellen, the Chairman of the Federal reserve, and Mario Draghi, head of ECB. But Russia still has its own specifics: the ruble in free swimming, the hallmarks of the Central Bank, but the market all know who’s in charge. Putin does not need “pressure” on the Central Bank be called for the interview Nabiullina, sufficiently accurate to speak about the connection of the ruble to the budget.

And if suddenly is not enough, the President has enough tools to succeed.

The expert, “MK”:

Vasily SOLODKOV, Director of HSE banking Institute:

The Russian authorities often, without going into details, gives different instructions. And guided by momentary benefit. Yesterday, those same officials, including the President and Prime Minister, advocated a strong national currency. And today it became profitable to weaken the exchange rate – immediately sounded the opposite statements.

The Central Bank is on his own, because he wants to look at least consistent. The purpose of the Central Bank is low inflation, then in any case can not abandon the policy of a floating exchange rate. Honor and praise of the Central Bank, if it will defend its position.

However, this is not a sufficient condition for any economic breakthrough. The government is responsible for GDP growth, creation of favorable climate for business and investment, a fair legal system. Yet, even in the case of suppression of a “strong ruble”, we see that the government budget tactical tasks take precedence over the General understanding of how to develop the country. This is absolutely unacceptable.

P. S. in the meantime, the ruble is the second day in a row continues to fall. On 22 July, the dollar strengthened 90 cents, Euro 95. The exchange rate on the weekend made 64,63 and 71.25 ruble per us and European currency, respectively.

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