Russia loses trust in its currency

 

Russia loses trust in its currencyThe Russian ruble continues to fall dramatically. The official rate of the dollar for December 13-15, set by the Central Bank, is 56.8919 rubles. The euro has reached 70.5289 rubles. Russian prime minister Dmitry Medvedev said that “the ruble has had many crises, but then it became stronger; we need to stay patient and everything will be good, we should not fuss but simply wait for the future.”His optimism, however, is not shared by the experts. Member of the State Duma Committee on Financial Markets, Boris Kashin, commenting on the situation with fluctuations on the foreign exchange market, said that the Central Bank cannot cope with the tasks: “Now, in search for the guilty in the critical situation that has transpired, the Central Bank is often pointed at. From my point of view, the policy of the Central Bank is really helpless.”Among the reasons for such a situation he named the attack on the ruble: “Here we are paying for our position of principle in Ukraine, and I think that there is no other choice we had, because it was a prepared special operation, and Russia acted absolutely correctly. And in response we have received these actions .The western hedge funds are always acting in view of the political situation here, and of course, it took its toll.”The other reason is the weakness of the Russian economy: “Here we can agree with the Central Bank, which says "Look, we are accused of not giving loans to the real sector. But it is the function of the government to provide the projects, and we do not see such projects. "But here, of course, we, from my point of view, balk at the main reason - the weakness and incompetence of our government. The entire set of these reasons requires rapid decisions. Unfortunately, our executive branch is not yet ready for them.”The director of the Moscow School of Economics at Lomonosov Moscow State University, Alexander Nekipelov, reminded that the fall of the ruble started even before the events in Ukraine and before the fall in oil prices. “In 2008 we had the strongest flight of capital – 138 billion dollars according to official data. There are different estimations for this year, and 100 dollars are the most favorable ones. The Minister of Finance mentioned 130 billion. It is comparable to what we had in the crisis of 2008 and 2009.”In the situation of panic there are good reasons for speculation, but, in the opinion of Nekipelov, it is the consequence and not the cause of it: “We are losing our national currency, we lose the trust of the economic constituents in the national currency. This is a huge blow. The economic constituents got used to the ruble being their main currency. Now we have a big change.”According to Boris Kashin, it is necessary to limit capital flight without touching the cash currency so that citizens do not feel the difference: “We need to make it obligatory to sell foreign exchange earnings, though it is necessary, at the same time, to guarantee real sector companies that they will be funded. And of course, this dogma with the open market, with free currency transactions in such a critical situation, will be very expensive for us. I want to remind you that all countries, including very advanced ones now – [such] as Japan, South East Asia – were imposing restrictions on the movement of assets. I will say it again - it will not affect the population. But in the current situation it should be done. Otherwise, we will be looking at the long-term depreciation of the ruble. And, of course, we need to take personnel decisions - I mean first of all the executive power, the government.”According to Nekipelov, the situation requires extraordinary measures: “They are connected to the introduction of 100% currency sales, with limiting open positions in currency for banks. We need to introduce a tax on financial operations. But we should not touch the population. These measures do not meant the liquidation of the currency market. They just mean a change in the way it functions.”

 

 

 

"Vestnik Kavkaza"

The Russian ruble continues to fall dramatically. The official rate of the dollar for December 13-15, set by the Central Bank, is 56.8919 rubles. The euro has reached 70.5289 rubles. Russian prime minister Dmitry Medvedev said that “the ruble has had many crises, but then it became stronger; we need to stay patient and everything will be good, we should not fuss but simply wait for the future.”
His optimism, however, is not shared by the experts. Member of the State Duma Committee on Financial Markets, Boris Kashin, commenting on the situation with fluctuations on the foreign exchange market, said that the Central Bank cannot cope with the tasks: “Now, in search for the guilty in the critical situation that has transpired, the Central Bank is often pointed at. From my point of view, the policy of the Central Bank is really helpless.”
Among the reasons for such a situation he named the attack on the ruble: “Here we are paying for our position of principle in Ukraine, and I think that there is no other choice we had, because it was a prepared special operation, and Russia acted absolutely correctly. And in response we have received these actions .The western hedge funds are always acting in view of the political situation here, and of course, it took its toll.”
The other reason is the weakness of the Russian economy: “Here we can agree with the Central Bank, which says "Look, we are accused of not giving loans to the real sector. But it is the function of the government to provide the projects, and we do not see such projects. "But here, of course, we, from my point of view, balk at the main reason - the weakness and incompetence of our government. The entire set of these reasons requires rapid decisions. Unfortunately, our executive branch is not yet ready for them.”
The director of the Moscow School of Economics at Lomonosov Moscow State University, Alexander Nekipelov, reminded that the fall of the ruble started even before the events in Ukraine and before the fall in oil prices. “In 2008 we had the strongest flight of capital – 138 billion dollars according to official data. There are different estimations for this year, and 100 dollars are the most favorable ones. The Minister of Finance mentioned 130 billion. It is comparable to what we had in the crisis of 2008 and 2009.”
In the situation of panic there are good reasons for speculation, but, in the opinion of Nekipelov, it is the consequence and not the cause of it: “We are losing our national currency, we lose the trust of the economic constituents in the national currency. This is a huge blow. The economic constituents got used to the ruble being their main currency. Now we have a big change.”
According to Boris Kashin, it is necessary to limit capital flight without touching the cash currency so that citizens do not feel the difference: “We need to make it obligatory to sell foreign exchange earnings, though it is necessary, at the same time, to guarantee real sector companies that they will be funded. And of course, this dogma with the open market, with free currency transactions in such a critical situation, will be very expensive for us. I want to remind you that all countries, including very advanced ones now – [such] as Japan, South East Asia – were imposing restrictions on the movement of assets. I will say it again - it will not affect the population. But in the current situation it should be done. Otherwise, we will be looking at the long-term depreciation of the ruble. And, of course, we need to take personnel decisions - I mean first of all the executive power, the government.”
According to Nekipelov, the situation requires extraordinary measures: “They are connected to the introduction of 100% currency sales, with limiting open positions in currency for banks. We need to introduce a tax on financial operations. But we should not touch the population. These measures do not meant the liquidation of the currency market. They just mean a change in the way it functions.”