The ruble strengthened even in spite of the daily purchases by the Ministry of Finance currency. This week, the dollar dropped to two-year low and is trading at the level of 56.7-58 rubles. The Euro is approaching the mark of 60 rubles.
That means strengthening of the national currency for the Russians? Who will benefit from the fall of the dollar and the Euro, and who will lose? This question Aify asked the financial analysts.
Sergey Melnikov, chief analyst, GLOBAL FX
Citizens, perhaps, are the main beneficiaries of the expensive ruble. First, the higher the rate of our currency, the lower the inflation. At the moment, consumer prices remain at historic lows — since the beginning of the year inflation was only 0.7%. This dynamics is caused, in particular, the strengthening of our currency. Secondly, the expensive ruble makes it more affordable imports — clothing and food, which many of us on the wave of import substitution have already forgotten. Thirdly, for traveling of citizens decrease the costs of the stay abroad.
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However, now the population and the state on the basis of an expensive ruble was an obvious conflict of interest. The government’s strong ruble is not necessary because it leads to a reduction in revenues from exports of oil and gas. This, in turn, leads to lower tax revenues, and given the fact that the Federal budget is in deficit (more than 1.2 trillion rubles in January), the situation looks alarming.
And in this context between the state and the population there is one fundamental difference: the government, unlike citizens, the ruble may affect. This means that eventually our currency will have no choice but to start falling. Most likely by the end of the first quarter of this year quotations of the dollar on the Russian currency market achieved 62 — 62,50 rubles.
Azret Guliyev, Deputy head of analytical Department IFK “solid”
In my opinion, for business, and useful for the population more or less stable (market) exchange rate of the national currency. Despite the apparent benefits for the population, the strengthening of the national currency, which this week allowed the market to successfully test levels in the area to 56.8 to the dollar, also carries hidden risks.
Importing products that are made orders under the old course in the area of 61-62 per dollar, still will shift their exchange rate losses on the final consumers that will not lead to lower retail prices for goods in the consumer market, but rather to growth. The decreasing of the prices if will happen gradually and probably not earlier than 3 months, under condition of preservation of positive dynamics on the ruble.
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At the same time, the growth of the national currency weakens the competitiveness of Russian production on the world market and reduces the income of exporters, and hence of the state, provided that the ruble is growing while the value of the exported energy remained unchanged in the region of 55 dollars per barrel of oil. In the future this discrepancy will lead to a reduction in tax revenues, and given the huge numbers of state employees and employees of state corporations, it will slow the pace of recovery in real and nominal incomes of the population and play against consumption growth. And it threatens a negative not only for the export-oriented sectors of the economy.
Michael Mashchenko, an analyst at eToro
For the main part of the population, a strong national currency will mean a decline in the ruble cost of imported goods and cheaper domestic analogues. In addition, the expensive ruble will increase the availability of foreign goods will reduce the price of the tours, and also will lead to reduction of expenses of citizens abroad.
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However, the population may lose from a too strong currency, which leads to a fall in the ruble profits of exporters such as Gazprom and Rosneft whose incomes make up a large part of revenues. Less money in the state Treasury means cuts in social spending and the development of the economy, and therefore, though at first sight not quite obviously, citizens can lose from excessive strengthening of the Russian currency.
It is also worth remembering that with the weakening of the ruble in small and medium businesses have the opportunity to compete with foreign companies and to increase its presence in the market. However, it was possible to follow the opposite trend. If the strengthening of the national currency will continue, in addition to weakening economic growth, we can see falling employment and wage cuts for ordinary citizens.