Success in foreign trade strengthens the ruble

Success in foreign trade strengthens the ruble

The ruble has good chances to continue strengthening in the near future thanks to the high positive balance in foreign trade, the head of Economic Development Ministry of Russia Alexey Ulyukayev said during today's meeting with the Finnish business communities.

"The national currency has strengthened greatly at the Foreign Exchange Market. The exchange market reflects a supply-demand ration, and it looks like the ruble will continue to grow. Why? Because we will have a positive balance of payments this year and the trend is expected to continue in the future,” -  Tass cites him as saying.

According to the minister, the trade balance will be improving due to positive market conditions, including on the oil market. "We expect that in the coming years the current account surplus will be $ 60-65-70 billion dollars,'' - Alexei Ulyukayev predicted.

Associate Professor of the ‘Stock Markets and Financial Engineering department at RANHiGS [Russian Presidential Academy of National Economy and Public Administration] Vasily Yakimkin said in an interview with a ‘Vestnik Kavkaza’ correspondent that "the surplus always strengthens the national currency, and the ruble is no exception". "The positive balance of payments means that the ruble add value and assets and liabilities will have to be balanced. The surplus means that it is necessary to strengthen the ruble in order to increase its rate," he explained.

"Another thing is that our financial authorities, primarily the Ministry of Finance, don't want it to happen because it leads to a hole in the budget. We need to gradually devalue the ruble. Then every time the exchange rate against the dollar improve by one ruble the budget gets about 50 billion rubles in profit," - the expert said.

"Siluanov can prevent this process. I think that he will ask the Central Bank to help him, as he works together with Nabiullina on macroeconomics. Thus, if Ulyukayev requests, the Russian Central Bank could start buying more US dollars and it will pull push down the ruble's exchange rate. I think this intervention may begin when the dollar falls to 63-64 rubles per dollar," suggested Yakimkin.

Professor at the National Research University – Higher School of Economics, Aleksander Abramov, also believes that the trade surplus, mentioned by Alexey Ulyukayev, will contribute to the strengthening of the ruble.

"In plain words, it means that the minister hopes that the oil price will slightly increase, the commodity account in the balance of payments will be consistently positive and the capital outflow will be reduced. Actually, it gives an opportunity to strengthen the ruble. The entire structure is based on the assumption that oil prices will increase,’’ the expert explained.