Finance Minister Anton Siluanov acknowledged that the Russian authorities have no room left to solve the problem of a too strong ruble exchange rate. This was stated by the head of the Ministry of Finance during the Congress of Russian Industrialists and Entrepreneurs (RSPP), RBC reports .
Siluanov said that the abolition of currency restrictions, which the Bank of Russia introduced to prevent panic in the foreign exchange market in early spring, does not help stabilize the exchange rate and solve the problem of a too strong ruble. Under the circumstances, Siluanov sees only one solution: to reduce budget expenditures and sacrifice windfall profits from oil and gas and start buying up foreign currency, that is, start foreign exchange interventions in the market. “Part of the expenses can be omitted, and super-oil and gas revenues can be used to carry out interventions in the foreign exchange market,” Siluanov said.
Moreover, the authorities are afraid to buy dollars and euros directly because of the sanctions, Siluanov admits, so interventions will take place indirectly – through the currencies of friendly countries. The head of the Ministry of Finance estimated the costs of intervention at trillions of rubles. To raise the dollar by 10 rubles, the authorities will have to spend more than 1 trillion rubles on buying foreign currency. According to approximate estimates of the Ministry of Finance, the cost of dollar growth per ruble will range from 130 to 200 billion rubles.
“That is, 10 rubles of the exchange rate is more than a trillion rubles. A good volume,” the head of the Ministry of Finance stated.
Commenting on foreign exchange interventions, Siluanov expressed hope that the Minister of Economic Development Maxim Reshetnikov would support the initiative of the Ministry of Finance, but the head of the Ministry of Economic Development had previously opposed this idea. Reshetnikov believes that the measure will not change the situation, since the excess of foreign currency on the market is such that even a large-scale intervention will not change the too strong ruble, and excessive spending on interventions can destabilize the budget.
“We are afraid that the situation will worsen, because in the face of a lack of demand, the reduction in budget spending will have an even more negative impact on the economy,” Reshetnikov said.
An overly strong ruble exchange rate has become a key financial problem for the Russian authorities. Due to the strengthening of the ruble, the main sectors of the Russian economy that work for export suffer, their incomes fall and they become uncompetitive in foreign markets. Similar problems have already been faced by Russian metallurgists, who are already working on the verge of profitability. The absence of a solution will lead to a reduction in the output of all exported goods, which will hit the Russian economy sharply. The optimal exchange rate for the dollar is estimated at 70-80 rubles; during trading on the Moscow Exchange on June 29, the rate dropped to 50.0125 rubles.