Today, the dollar continued its decline. Since the beginning of trade it barely raised above 57 rubles for 1 dollar. Right now it's traded at the level of 57.02 rubles for 1 dollar. Since ruble/dollar crossed the psychological threshold of 60 rubles per 1 dollar, media report that overpriced ruble can damage the Russian economy. An associate professor of Stock Markets and Financial Engineering of RANEPA, Vasiliy Yakimkin, disccused whether it's a real threat in an interview with Vestnik Kavkaza.
- What economic sectors will the rising ruble hit first?
- Actually, this is a pretty difficult question. Traditionally, economists teach that an expensive national currency hits exports and stimulates imports. It's obvious: if the national currency grows, the cost of goods also grows, and it's hard for them to compete in the international market - as for imports, the situation is opposite, goods get cheaper and the country buys more. That's why, first of all, those economic sectors that are associated with exports need a cheap ruble, while those that work with imports need an expensive ruble. Indeed, Russia's imports have grown significantly since January 1, when the ruble began to grow.
Nevertheless, it's not that easy. Due to sanctions, many corporations stopped purchasing technologies, so business development in this direction is experiencing certain difficulties. Since the need for technological updates will increase year after year, they will have to make purchases using foreign currency, so even our export-oriented companies will hav to buy technologies cheaper and update their business cycle, when they will need an expensive ruble. In this sense, it's difficult to say that export-oriented business benefits from a cheap ruble.
In my opinion, the current dollar-ruble ratio is pretty much in line with our payment balance, and I don't think that the ruble can become much cheaper due to it. Of course, the oil market causes certain fears, because there's still overproduction, and if oil prices will once again drop below 50 dollars per barrel, the ruble will begin to get cheaper along with them.
- How will export sectors react if the dollar remains at the current level of 56-57 rubles?
- The export sectors depend on top managers's policy, their ability to work effectively. Despite the fact that the government says that current level is too high, export in many segments of petrochemical and agricultural sectors is growing. Recently, Agriculture Minister Alexander Tkachev warned that the current level against the dollar can put agricultural export in danger, but everything is fine and producers get a great profit. It shows that the current ruble-dollar ratio is fine.
I think that at the current ruble exchange rate against world currencies, primarily the dollar and the euro, these sectors won't suffer and will evolve. If we won't suddenly open our market to Western competitors in agriculture, then everything will be fine, our farmers will grow very dynamically, and in 5-7 years they will be able to completely provide Russia with everything it needs, so it will be difficult to talk about foreign vegetables as competitive. That's why hothouse farms are so good, current technologies allow us to produce vegetables all year round even in harsh climatic conditions.
Talking about petrochemical industry, the ruble is still very cheap for it, so it will not only increase the volumes of supplies to the domestic market, but also abroad. Russia has no competition here, that's why a number of Chinese enterprises are transferring their production to Russia. It's not because of some environmental laws in China, but because of cheapness of Russian labor force compared to Chinese even at the current ruble level. Overall, the ruble can still strengthen even more without negative consequences for the economy.
- In this case, which ruble exchange rate is the least useful for the Russian economy?
- It shouldn't be expensive or cheap, but stable. Business must understand the rules of the game and imagine what rate will be in the future and what profit will they get. There shouldn't be a situation when business is forced to include price jumps due to sharp devaluation or the ruble growth into business plans. This is the most negative things, because when the business is anticipating price jumps in any direction, it begins to increase prices and costs by 10-15%, sometimes 20%. This shouldn't happen. So unstable ruble is the worst thing. If the ruble is stable at the current level, this will seriously help the Russian economy.