Economic Development Minister Maxim Reshetnikov admitted during the St. Petersburg International Economic Forum (SPIEF) that an overly strong ruble exchange rate is a problem for the Russian economy. His words are quoted by the Russia 24 TV channel.
According to the official, at the moment the situation is constrained by high prices for export raw materials, but this is already starting to create problems. “Of course, this new package of challenges for the economy is being formed, first of all, a strong ruble, which, of course, has strengthened excessively. And it creates a problem for both our exporters and importers,” the minister said.
Reshetnikov sees the solution to the problem in the restoration of demand in the economy with the help of a sharp increase in lending. The budget actually works for these tasks, which allocates money for preferential loans in all areas: mortgages, consumer lending, lending to businesses and enterprises. The head of the Ministry of Economics expects additional demand support from the Bank of Russia, which should lower the key rate, thus making lending even more accessible.
For the first time in fact, the Russian authorities publicly admitted that a strong ruble is a big problem for the Russian economy. Previously, the strengthening of the ruble was presented by the Kremlin and its representatives as an argument for macroeconomic stability and the near-zero effect of Western sanctions. Russian President Vladimir Putin even claimed that "the dollar is shrinking", which allegedly indicates the adaptation of the economy.
In fact, the Russian budget was drawn up at an average annual dollar exchange rate of 72 rubles, and a significant depreciation of the exchange rate hits Russia's income. At the moment, a strong ruble is the result of a collapse in imports into the country and restrictions on the movement of currency within Russia by the Central Bank. The impossibility of solving problems with imports will lead to a drop in the profitability of Russian business up to bankruptcies, Russian metallurgists have already faced similar problems.
