What will happen with the ruble until the end of the year? This is one of those questions which now excites many Russians: the pandemic will end sooner or later, and the economic crisis may be greatly delayed. Rubles for the period of isolation in the vast majority of compatriots, and so was markedly less, and the rate of the national currency since the beginning of year has fallen markedly. Too many negative factors put pressure on the ruble and falling oil prices to a record and lying on the side of economy, and falling along with incomes, consumer demand. It is not excluded that this year the ruble is destined to endure a new collapse relative to the dollar and the Euro. This prospect in an interview with “MK” described despite the presence of Oleg, Director of the Center for economic policy research economic faculty of Moscow state University, President of the Association of independent centers of economic analysis, formerly head of international financial markets, Ministry of Finance and the Deputy chief of staff of the Russian Government.
Oleg V. not long ago, you gave a forecast that this year the Russian ruble will continue to weaken. What caused it?
— In General, the rate of the national currency depends on the balance of payments of the country, which has two components. One connected with trade and all sorts of cross-border payments — wages, transfer of interest, dividends, and so on. This is the current account, and then there is the financial account, which reflects the movement of capital. In Russia a key role plays the factor of the current account, especially the trade balance: with the high price of oil formed a significant surplus, which strengthens the ruble. With the fall in oil prices, a sudden “collapse” of the current account, is fraught with the weakening of the ruble.
However, the further situation with the exchange rate will depend on the actions of the monetary authorities and by market sentiment. Slowly, the Central Bank let the ruble by selling dollars from the national welfare Fund (NWF) and parallel to granting ruble liquidity to the banking sector. Of course, someone wants to change rubles into dollars to hedge against further depreciation. But if the printing press is operating at full power and there will be no restrictions on the conversion of Russian currency in foreign, the ruble is threatened by a new fall.
by the Way, on a printing press. According to a recent decision of the Central Bank, the banking system will inject liquidity in the form of long-term REPO in the amount of about 1.5 trillion rubles. But this economic recipe dates back to the mid-90s, since then it has not been used. It will enable the authorities to print rubles in order to avoid additional expenditures from the national welfare Fund. How do you feel about this as a formerparty see the harbinger of devaluation?
— This project is inherently emissive, and ultimately focused on the weakening of the ruble. Meanwhile, officially proclaimed the desire to make the ruble a full-fledged international currency instead of dollars to pay in rubles. But a few years ago my colleagues and I investigated the question of settlements in the national currency within the Eurasian Union, and it turned out that the Russian financial authorities, for example, strongly opposed to neighboring States issue loans in rubles. Only in dollars. It’s the same with reserves. Apparently, psychology is as follows: rubles we can print in any quantity and whenever you want. And dollars, the real currency — no, and so we hold, and the ruble will pomechtaem. That’s flawed logic.
— to Print money in the case of the current economic situation in Russia — it is the right tactic or not?
— I Think not, although the Central Bank has a different opinion, and I would very much like to hear their detailed argument. Here pertinently to remember about the crisis events of the end of 2014. Then the ruble collapsed not so much because of low oil prices, but because the Bank of Russia in the frameworks of lending under the so-called non-marketable assets thrown into circulation trillions of rubles on channels that are not really controlled. When you make loans against government securities, the volume of which in circulation is limited, you under them can’t print so much money. And in the case of non-market assets of money you can “stamp” any amount.
In fact, now we are talking about what are we going to Finance the budget deficit by issuing new government bonds that the banks will immediately pledge in the Central Bank under monthly and yearly loans. Then how the banks will manage the money for me big mystery. In the current circumstances no sane banker will not give long-term loans — too risky.
— Previously it was thought that the fall of the ruble exchange rate automatically means a surge in inflation in the country. Does this pattern now and should we, in principle, to fear in the short term acceleration of inflation?
— inflation is a difficult question, and the Central Bank feels it. We are now on the suppression of inflation are very strong factors. First is General economic decline. Of the economy that are in decline and are not actively injected money, as a rule, are not inflationary. No coincidence today’s developed countries rather afraid of deflation, falling prices, than inflation. And the current emission project a very wrong time. Where, in which markets move these rubles, they will flow in foreign currency is unclear. But if you spill, we immediately get a surge of inflation. There is another important��second factor, which while hardly anyone pays attention. When we stop a significant part of the economy on quarantine, we have blocked the path of movement of consumer goods within the country. Now channel shopping and delivery of goods at home became almost uncontested disappeared fairs, small shops. In fact, we lost a huge amount of trade and related suppliers. This is bad from the point of view of competition and has led to higher prices.
If you listen to statements by officials and experts, there is a clear divergence of opinion: the ruble is “rid” of oil, critically depends on it. What about this do you think? And what does the ruble, the current situation in the oil market?
— Indeed, the ruble is “rid” of oil, but only in the current, short term. Suppose today the price of oil went up a little. But the ruble and stock market players, and the Central Bank it is not react, because the money to physically come into the country not when these fluctuations of prices. In the long term play of other factors — starts to work the above-mentioned balance of payments. And it is possible that the current collapse of the price of a barrel will lead to the so-called off-scale effect of the exchange rate. Occasional clipping is when you have a shallow market and any movement of hydrocarbon prices will drop the course from side to side, then hot, then cold. Either panic or a boom.
How CB policy to reduce the crisis in the key rate affect the state of the ruble and whether it can help to keep the ruble from collapse?
— Here much depends not only on current circumstances and expectations. The recent decline in the Central Bank rate theoretically means that all the criteria of the ruble is becoming less attractive as a means of investment interest that investors can earn on rouble-denominated investments is reduced. In reality, however, happened exactly the opposite: the ruble began to strengthen. Markets realized by the mood of the Central Bank that the decline in the key rate will continue, and therefore, those government bonds that they own, tomorrow go up even more. But when the markets will see that there is a reversal, a rate decrease will not succeed, because it would be contrary to inflation trends, at this point, begin the reverse process: the paper will become cheaper and investors to escape from ruble. The trajectory of change is more important than specific levels of bets.
Well, depends whether the ruble exchange rate from external factors: for example, the state of the global economy, sanctions?
— Penalties — an extremely important factor. As the progressive socialization of our economy much of what previously it flowed through the channels of the private sector, today already supplied by the state or its related companies in relation to��AI, which can be. Accordingly, if sanctions will be tightened, it may have a negative impact on trade and the financial account. A crackdown is more probable than a weak: all those reasons because of which in 2014 were introduced restrictive measures against Russia, have not disappeared. If to speak about the current global crisis, for us it is bad in at least two aspects. First, do not have to wait for the recovery of any remains of oil prices nor the demand for it. Second, during the recession investors take away from emerging markets last money and put them somewhere safe. We may obtain additional capital outflow.
Can you imagine what the ruble against the dollar and the Euro we will see the end of the year?
No. And will not even try.
Then what would you recommend to those Russians who have kept some savings in what currency to invest?
— it’s complicated. Let’s say you now want to buy dollars to exchange for rubles. But even just to recapture the difference (spread) between the buying and the sale will require a significant weakening of the currency. The game is not worth the candle. On the contrary, now we need to avoid sudden movements and seek to maximize the security of their investments. The crisis is not the best time for financial ventures, to the sudden enrichment. This is especially true for people without money to spare: existing small savings may be needed in the event of loss of job, source of income or, God forbid, illness of a loved one. It is important that these funds were not somehow connected, that at any moment they can be easy to get and use.
Why did the authorities so stubbornly refuse to spend money NWF, although it is clear that rainy day has arrived? Any price to save every penny — as far as this tactic is justified and true?
— As in crisis acting authorities in most countries? When the uncertainty exceeds the limit, and a General fear is growing, all rational agents — banks, enterprises, households cut spending, stop investing. The economy continued to function, governments are beginning to throw money into circulation. In this case, the state is the agent of the whole society: getting into debt and in inflation, it provides a “lubricant” for the economic engine. In Russia the state is a strange way behaves the opposite: not as a public agent, and as a private Corporation.
do you think that during the current global crisis and the dollar could depreciate?
— No, the dollar is likely to strengthen, because no alternative to it. International reserve currency — this is a very important economic from��invention of mankind. What good was the dollar in recent years? Unlike many other currencies, the rates of which fell into the negative zone, he would bring investors any positive percentage. Whether we like it or not, the dollar remains one of the pillars of the global financial system, a reliable asset, especially in demand during a crisis. As for the Euro, the currency is pulled in different directions of its different components. Relatively speaking, it is still the most popular German brand, but there are the French franc, and Italian Lira, and Greek drachma, and so on. Such is the strange “compote”. Taken in Frankfurt, decision of the European Central Bank is politically very difficult, since it must reflect the interests of all participants of the single European currency. The US is powerful and homogenous economy, and decisions about the dollar to develop much easier.
— What will happen to the incomes of Russians, as the crisis will affect them in the near and distant future?
— the saddest figure in recent years is connected not even with the decline the domestic economy, on a global scale shrunken about one-fifth. It is associated with the dynamics of real incomes of the population. Despite the fact that GDP began somehow to add after the failure of 2014, with revenues nothing like this has happened. People were getting smaller, their welfare fell. Because by and large, not investment, are the basis of economic growth, although many think so, and steady consumption growth. People should be free to spend money without thinking about what their tomorrow will be a disaster. If private investment is still possible somewhere to replace the state, to attract from abroad, it is forced to consume its citizens, who are afraid of something, will not work.
today I often remember the default of 1998 and the wreckage from under which country a while, I get out. We all come from there. All the current Russian elite are generated by default, then fears and complexes. But in 1999, the population suddenly realized that, despite the recent crisis, it acquired the ability to produce something, with no interference from the authorities. Due to the devaluation of the market cleared import. Continuing economic growth which was interrupted only by the world crisis of 2008 was caused by a combination of a few simple factors — the present competition, non-interference of the state, working with money and optimism of the people who believed in the formula: if today work, tomorrow will get the result. Today there is no optimism, no. Real incomes will leave in a minus, and given the unwillingness of the authorities to massively help the economy they may fall by ten percent.