Expert: National Currency Exchange Rate Very Stable

24 july 2015

The Deputy Head of the Department for Expert Analytics of the Analytical Center Daniil Nametkin believes that the western sanctions that have partially cut off the Russian economy from global capital markets can actually have a positive impact on the Russian economy.

The expert believes that one effect of the sanctions will be a diminished effect of the shocks that Sberbank predicts in its forecast on the national currency and domestic capital markets. In its forecast titled External Shocks 2015: Unpleasant but no Catastrophe published a few days ago, Sberbank writes about the external factors that are having an impact on the country’s economy such as the higher risks surrounding the situation in Greece, the successful resolution of the nuclear dispute with Iran, the slowing down of economic growth in China as well as a possible increase in the Federal Reserve rate in 2015.

Mr. Nametkin believes that the national currency has already adapted to the new economic conditions and despite the likely continued downward trend of the oil price through the end of the year, the RUR to USD exchange rate is most likely going to remain within the range of between 55 and 60 rubles per dollar. The expert believes that the Bank of Russia has been fairly successful at regulating the parameters of supply and demand of both ruble and foreign currency liquidity in the market, which shields the national currency against dramatic changes in the exchange rate. “To that end the regulator is using the mechanism of sale and repurchase agreement auctions as well as direct foreign currency lending. Other instruments are also being used to remove excessive liquidity from the market,” Mr. Nametkin points out,” consequently, even if the situation in the global markets was to deteriorate further, the regulator would have no need to resort to drastic measures such as increasing the key interest rates. The fact there is no threat of a stricter monetary policy is also confirmed by reduced inflationary expectations resulting from the effect of the devaluation of the ruble on inflation going out of steam (in June monthly inflation was just 0.2 %).”

This comment was made by Daniil Nametkin in an interview for the business weekly whose journalists were trying to find out why the forecast published by Sberbank stirred so much interest and debate in the mass media.