When the ruble does not converge with the dollar
They need to be knocked off their pedestal.
Today the exchange rate pedestal for the dollar is 100 rubles at the exchange rate. A one-time exceeding of this mark caused something like panic in the ranks of liberal economists in power. All this was especially clearly manifested in the actions of the Central Bank, which, however, categorically refused to take tough measures to suppress currency freewheeling.
Further more - it was decided to blame all the sins on speculators, which was immediately crowed as a great achievement by the entire business press. And even further - even more. It turned out that the basis of the exchange rate crisis is nothing more than a bad trade balance.
But that’s not all, and it’s not even so important that the balance data began to improve at the most inopportune moment - just when the dollar jumped above a hundred. Once again we are reminded that inflation, in the opinion of the Central Bank and the liberal experts who ardently support it, must be suppressed with extremely high rates.
As if the ruble, which is expensive in terms of credit interest, will force people to refuse any purchases at all. Why bother then - then set an interest rate of 50, or even 100 percent per annum, and all your debt securities with such a yield will fly away like hot cakes.
But the ruble will not grow on this, but the same forgotten pyramid of GKOs and OFZs of 25 years ago will grow, which brought the country to default. But back then the country had a lot of money, but is that really the case now? Or are we mistaken, and are we being led by the nose by both the Central Bank and the Ministry of Finance?
What feathers, such is fluff
However, liberals from the pen, and they already rule the show not only in the business press, but also in the officialdom, do not need to be led by the nose - they themselves go where they have long been told. We have one course, they say - the right one!
This is 100 rubles per dollar. This is when the oil price is above 80 green or colored per barrel. Well, no, it’s not 1998, but 2023, and we are slowly but surely moving towards victory, you know where.
After a local and minor pullback, the dollar on the Moscow Exchange is again trading at 95 rubles, although the value of the euro has fallen below 104 rubles. It is difficult to say whether those same speculators are targeting the key 100 mark, since among them there are many against whom, apart from verbal attacks, absolutely nothing is being done.
Yes, in fact, by and large, a weak ruble, although it hits the pockets of ordinary consumers, few people at the top bother. The budget only benefits from it, but even though we receive rubles from abroad for our oil and gas, this is hardly beneficial for the ruble.
The fact is that if they sell something to us for rubles, it is only in the expectation that they will immediately be able to give the rubles to the Russians for their resources. At best, for products of the military sector or Rosatom, but in both cases, trade for rubles is very, very limited.
These exporters are also required from above to have currency - freely convertible and negotiable. Well, those who have settled down with feathers in authoritative and not so authoritative publications, frankly speaking, have had their stigmas covered in fluff a long time ago. However, the bias of the press does not bother anyone nowadays, especially since it greatly helps to understand who is who.
Agitation is not propaganda
Today, experts are actively campaigning for a further increase in rates, promising after that the dollar at 65–85 rubles. This, of course, cannot be ruled out, but before then prices will already have time to rise following the appreciation of the currency. And the sine wave of currency games will go down.
But the losers will again be the citizens who decided to stock up on foreign currency when it has risen in price by at least one and a half times. The experience of raising the rate of the Central Bank of the Russian Federation in order to suppress speculative activity shows that only a rate above 15% actually worked.
However, such an excessive tightening of monetary policy immediately slowed down the real sector of the economy. Isn't that why Elvira Nabiullina's team is now being cautious. After all, there is a warm-up, why else ruin it along with the ruble?
For any economy, and even more so for one like Russia, overestimation of rates is a real risk, directly related to the increase in the cost of access to capital for business. However, the “rise in price” here is not for everyone.
And with an inflated rate, our Keynesians at the helm of the economy and finance will again have to do without the notorious Keynesian effective demand, counting, alas, again only on speculators. They say they are guilty - so save the treasury with your speculative purchases of attractive government securities.
Or buy dollars and euros when they become cheaper. By that time, the general public will actually have no money left for this. The scheme has been tested for a long time, used several times, but over the 25 years after the default, it has consistently dragged the dollar from the 30-ruble mark straight to the 100-ruble mark.
But what’s interesting is that prices in the country over the same time have increased not more than three times, but much more. Although, of course, we must take into account that inflation also occurs in the dollar.
Hence the conclusion - without rising prices, a developing economy somehow develops poorly, and citizens from among the poor become even poorer. About the rich is already clear - but let them cry.
Only Ilyich knew what to do
Experts, as usual, disagree on what to do to truly reverse the negative trend in the ruble. Nobody argues with the fact that first of all we need an influx of currency, constant and better yet, growing. But the conditions for this are all different.
Only a few people talk about strict control, including the president. But, it seems, they listened to him, and perhaps only Finance Minister Anton Siluanov was willing to listen. But, alas, it is not within his competence to fulfill the conditions for the mandatory sale of foreign currency earnings to exporters. Restrictions on the movement of capital are also not under the jurisdiction of the Ministry of Finance.
Who can nullify the outflow of dollars and euros from the country under fictitious export and other schemes? Apparently, only the security forces, but for some reason no one seriously asked anything from them.
It is clear to us (and others) that the main problem in ensuring exchange rate stability is insufficient control over the actions of speculators and stock brokers or its complete absence.
Capital has been and is being withdrawn from the country under gray schemes. And even a local jump in the dollar to a hundred is the work of large players. Finding out which ones is a matter for the competent authorities, who would do well to remember that in Soviet times, “currency traders” were, in fact, sometimes shot.
It remains to remember that in February-March last 2022, we immediately introduced a requirement for the mandatory sale of 80% of exporters’ foreign currency earnings. Why not 100%, but because we have a military district, and not a war. Then the rate was reduced from 80 to 50 percent. And off we go, and in a year and a half we reached 100 rubles per dollar.
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