ALEXEI VEDEV: “EXTERNAL SHOCKS COMPLICATE SEARCH FOR COMPROMISE DECISIONS ON STRENGTHENING THE RUBLE’S EXCHANGE RATE

RF President Vladimir Putin has instructed the government to take further actions to strengthen the ruble. However, the agencies hold quite the opposite views on solution of this issue. The RF Ministry of Finance suggested charging the “exchange rate rent” from exporters, that is, a new duty which size is linked to the US Dollar. The Central Bank of Russia is against tightening of restrictions on capital movements. Amid the differences between the two key regulators, the Russian national currency is in no hurry to appreciate, staying at the level of Rb96 per $1.

 “External shocks complicate search for compromise decisions. The parties defined their positions long ago. The monetary policy produces an indirect and quite slow effect contrary to the measures proposed by the RF Ministry of Finance. At the same time, both the agencies are well aware of the risk of excessive devaluation of the ruble, though as far back as the spring the Central Bank of Russia dismissed such speculations. As for me, I favor the RF Ministry of Finance’s approach: efficiency is what Russia needs to prevent a slowdown of the economy in Q4. Overall, it is not so much about the differences between the two agencies as it is about the choice of more adequate instruments in the current situation and efforts to thoroughly calculate everything to avoid mistakes and negative implications,” Alexei Vedev says.