A weak ruble leads to negative consequences for the Russian economy, chairman of the Bank of Russia Elvira Nabiullina said.
She explained that a weak exchange rate of the Russian currency promotes the formation of financial bubbles.
"Another important consequence is also negative – it stimulates the dollarization,’’ the head of the Central Bank said in an interview with a ‘Russia 24’ correspondent, adding that people will understand that the Central Bank holds back the rate."
Nabiullina noted that people "will keep their money in foreign currency because the ruble can only become weaker.’’
Toda the dollar grew at the Moscow Stock Exchange and exceeded 68 rubles. The euro passe a 77-ruble mark as a result of a sharp drop in oil prices after unsuccessful negotiations in Doha.
On Sunday a meeting of representatives of oil-producing countries has taken place in Doha, the capital of Qatar. Its members failed to agree on the freeze of oil production. The talks lasted for more than 12 hours and the participants decided that they need more time for consideration, since the market is doing fairly well.
A professor of the Department of the stock market and investment market at the National Research University - Higher School of Economics Alexander Abramov said in interview with a ‘Vestnik Kavkaza’ correspondent that the reason behind Central Bank abandoning its previous position about positive consequences of a cheap ruble, is a reaction "to the situation of uncertainty because of the failed negotiations in Doha" . "On the one hand, its goal is to calm down the public opinion, saying that the weak ruble is not so bad. A stong ruble could conflict with the interests of those who chose the import substitution. Therefore, the head of the Central Bank is right to a certain extent,’’ he said.
"But it seems to me that the issue of the strengthening of the ruble was not considered as a purely economic problem, but in many ways as a social problem, because the people’s savings devaluated and their purchasing power reduced. People have become poorer," the expert said.
Assistant professor of the Stock markets and financial engineering at RANHiGS Vasily Yakimkin noted that now "the main task of the Central Bank is to ensure the price stability."
"The inflation will rise if the ruble takes a plunge now. They need to maintain stable prices with a stable ruble. They don’t need high volatility on the ruble market,’’ he explained.
"On the other hand, strategically they support the Ministry of Finance of Russia. And the Ministry of Finance needs a cheap ruble, because then it produces surpluse in dollars that they can convert into the rubles. If the exchange rate of the ruble depreciates by 1 ruble, the Ministry of Finance’s benefits will amount to about 50 billion rubles. Therefore, a cheap ruble is advantageous for the Ministry of Finance. Earlier Nabiullina supported Siluanov, saying that it was acceptable to to see ruble free-drifting. As an agreement on the freeze of oil production has not been reached in Doha there is a threat that the prices will significantly drop and it will put strong pressure on the Russian ruble,’’ the expert added.
