According to Maksim Oreshkin, the economic adviser to Russian President Vladimir Putin, the value of the Russian ruble has strayed significantly from its fundamental levels. Oreshkin predicts that the exchange rate will stabilize in the near future. He emphasized that a weak national currency hampers the structural transformation of the economy and has a significant negative impact on household earnings.
In an op-ed for TASS news agency, Oreshkin stated, “It is in the interests of the Russian economy to have a strong ruble.” This statement comes as the ruble reached its lowest level against the dollar since March 2022, touching 101 against the US currency and 110 against the euro, marking a 16-month low.
Oreshkin attributed the falling ruble to rising inflation and the monetary policies of the central bank. He believes that the central bank has the necessary tools to normalize the situation and reduce lending rates to sustainable levels. The importance of lending and credit for both households and the corporate sector in boosting economic demand was also highlighted by Oreshkin. He noted that corporate and consumer loans have contributed to the formation of 12.8 trillion rubles ($128 billion) of additional demand in the economy.
“These figures significantly exceed the amount of the budget deficit, which has only amounted to 1.5 trillion rubles ($15 billion) since the beginning of the year,” Oreshkin said. He further mentioned that the public sector has absorbed funds from the economy since the beginning of the year, negatively impacting the money supply by around 0.9 trillion rubles ($9 billion) as of August 1.
Oreshkin’s observations and recommendations come at a time when the Russian economy is grappling with the depreciation of the ruble and its implications. A weak currency poses challenges for various sectors of the economy, including imports, exports, investments, and inflation. If the ruble continues to weaken, it could lead to higher prices for imported goods, making them less accessible for consumers. Moreover, the depreciation of the ruble can also discourage foreign investors from investing in the Russian market.
However, Oreshkin remains optimistic that the situation can be rectified with the central bank’s intervention. He believes that stabilizing the ruble’s exchange rate and reducing lending rates to sustainable levels will benefit the Russian economy, enabling a smoother structural transformation and improving household earnings.
In conclusion, Maksim Oreshkin’s analysis highlights the significance of a strong ruble for the Russian economy. The recent depreciation of the ruble against major currencies has raised concerns about its impact on various sectors. Oreshkin suggests that the central bank has the necessary tools to address the situation and stabilize the ruble’s exchange rate. By reducing lending rates and ensuring the availability of credit, the Russian economy can experience increased demand and improved household earnings.
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