One year since rouble’s floating rate

One year since rouble’s floating rate

A year ago, the Central Bank of Russia decided to start using a floating exchange rate.

Summing up the results of the development of the Russian economy over the past 12 months, Bloomberg analysts have come to the conclusion that it will ‘‘never be the same.’’

They point out that one of the consequences of such a decision was the fall of the ruble by 30% against the dollar. It led to the fact that inflation reached a record level over the past 13 years. This fact forced the Central Bank to raise its key interest rate up to 17%. The peak of inflation was in January-February 2015. After it the dynamics of price growth slowed down.

Those citizens faced with financial difficulties were forced to abstain from foreign travel and imported goods and food in particular. The Russian food embargo also played a significant role, but it was not the main factor influencing the collapse of the ruble and significantly affecting the tourist flow out of the country, as well as sales of imported goods.

Complication of the economic situation pushed many employers to transfer many workers to part-time activity and even reduce the number of workers. However, despite this, the level of unemployment in the country managed to be maintained at the same level.

According to the agency, only those exporters managing to earn excess profits due to changes of the exchange rate of the ruble derived benefits from this situation, RBC reports.

As the Chairman of the State Duma Committee on Economic Policy, Innovation and Entrepreneurship Development Anatoly Aksakov noted in an interview with a correspondent of Vestnik Kavkaza, "it was a necessary step." "The Central Bank had no choice. But the move was not well-developed. This is a fact. It could have used tools that would allow the financial market to be managed much better. Secondly, it would be necessary to carry out explanatory work with those who were directly involved in the foreign exchange markets, especially with exporters. Then there would be less turmoil on foreign exchange markets,’’ he said.

The chairman of the board of the National Currency Association, Dmitry Piskulov, noted that the policy of the Central Bank, which caused active controversy at first, justified itself in the end and has convinced the majority of skeptics. "The majority of economists were inclined to believe that the decision was right, because it allowed a transfer to a floating rate under the external financial shock, which absorbed the shock by making the currency more expensive, especially in terms of the restricted admission of Russia to external financial resources,’’ he explained.

The associate professor of stock markets and financial engineering at RANHiGS, Vasily Yakimkin, gave a generally negative assessment of the decision of the Central Bank, adopted a year ago. As a result, this step significantly reduced the middle layer of the population. "Everybody became closer to the low-income categories. On the other hand, we got out of the trap of the average incomes, even in many manufacturing sectors, where wages of Russians were lower than those of Chinese. But there are some advantages: we can revive production and compete with China,’’ the expert said.

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