CBR CEO Sergei Ignatiev told PM Vladimir Putin that the ruble rate is becoming of market nature.
Photo: Dmitry Azarov
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Ruble Allowed Some Weakness
During his meeting with Prime Minister Vladimir Putin, CBR CEO Sergei Ignatiev gave the comprehensive explanation to the ruble behavior of the last fortnight. The Central Bank of Russia won’t be the tough manager of the ruble exchange rate, but will let the market gradually depreciate the ruble. It will take two months to find out to what extent this policy of the CBR will strengthen the inflation expectations, help contain the import growth, reduce the capital outflow and sustain competitive ability of Russia’s export and production.
Russia’s ruble depreciated 3.8 percent to bi-currency basket of $0.55+ˆ0.45, from 29.27 ruble August 6 to 30.38 ruble early September 5. The decline was first viewed as a temporarily trend triggered by the capital outflow as a result of the war in South Ossetia. But the depreciation continued past week, and the absence of helping arm of the CBR on the market of foreign exchange alarmed the analysts and the nation. The latter queued to the foreign exchange offices September 5, while the analysts found it too difficult to forecast the ruble performance till the end of this year.
The explanation that the CBR chief gave to Vladimir Putin doesn’t imply that the ruble will automatically continue to depreciate vs euro and the U.S. dollar. It wasn’t the first time that the CBR announced that the practice of tough control over the ruble rate was rather the matter of past, giving way to the technology of inflation targeting. But with the foreign money leaving the country, the market-determined rate of the ruble exchange should be going up instead of shedding.
The decline in oil prices shouldn’t be neglected either. Its result is the reduction in Russia’s exports, and the current account balance was no more than around $8 billion in August instead of the $69.4 billion in the first half-year, i.e. $11.5 billion a month on average. The changes in payment balance don’t add certainty to the situation with the ruble exchange rate. Unlike the exports, the import rates were 41.3 percent in the first half-year, and the CBR specifies the slowdown of between 15 percent and 21 percent in 2009. A weaker ruble directly affects the rates of the import growth.
www.kommersant.com
All the Article in Russian as of Sep. 08, 2008
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