According to the Bank of Russia, real ruble exchange rate to euro rose by 3.2% and by by 4.3% to US dollar in January. Preliminary results of 2016 show that real effective ruble exchange rate rose by 20.7%. Meanwhile, as the first deputy director of the Economics Institute of the Russian Academy of Science Mikhail Golovnin believes, "exchange rate doesn't play the main role in stimulating economic growth, but it is a very important indicator, since expectations of many economic agents depend on it."
According to him, Russia has no instruments of influencing the exchange rate since the middle of 2015. During the last crisis, the Central Bank switched to floating exchange rate, formally excluding this factor from its regular policy. However, Golovnin believes that it's necessary to interfere in the dynamics of the exchange rate, though this interference shouldn't be too extreme: "The decline of 2014 continues to this day. In my opinion, the Central Bank made a mistake by allowing the exchange rate to drop so much. Although there were other instruments. For example, in 1998 they actively used the restrictions on cross-border movement of capital... Transition to completely free circulation of capital was made too soon. There are a lot of market measures that can regulate the movement of capital."
Mikhail Golovnin said: "We are in a state of protracted crisis. Of course, it directly affects the ruble exchange rate. I think this exchange rate played a negative role in this situation. But it is necessary to interfere in the dynamics of the exchange rate, because floating exchange rate is determined by speculative factors. Actually, current situation in Russia is not so bad. For example, Poland's real effective exchange rate is lower than Russia's. Although there are only three countries that used floating exchange rate during the inflation targeting regime - Mexico, Chile and Poland. Recently, in such a difficult situation, Russia also joined them. Russia is different due to its high volatility. Investors pay attention to volatility of the exchange rate. If situation will remain the same we will get the worst result. In short, monetary authorities should focus on regulation of exchange rate."
