Russia's Economic Development Ministry expects stable ruble

Russia's Economic Development Ministry expects stable ruble

Russia's Economic Development Minister Maxim Oreshkin expects that the ruble exchange rate will remain stable in the coming months.

"The factors that influenced the ruble in the first half of the year are no longer of such importance and we expect the ruble to be stable enough and to remain near the current values that we believe are justified. We expect a stable ruble in the coming months," he said in Paris after a meeting at the French employers' federation.

Oreshkin noted that in April the ministry expected a weakening of the exchange rate under the influence of time factors.

"Since then, the ruble has weakened by 9%, which is really a big change, and that fully corresponds to what we expected by this time," TASS cited him as saying.

Advisor on macroeconomics to the CEO of the 'Opening-Broker' brokerage house, economist Sergey Hestanov, speaking to Vestnik Kavkaza, noted that the ruble's exchange rate is affected by two key factors: the budget deficit and oil prices.

"When the deficit grows, the ruble weakens, and vice versa. As for oil prices, the official contribution of the oil and gas complex to the filling of the federal budget is about 30%, but unofficially, it's 60%. And any fluctuation in oil prices is reflected in fluctuations in the ruble exchange rate," the expert said.

According to him, "when the budget revenues increase those planned because oil price is higher than the budgeted one, these revenues are sent to the Reserve Fund."

Hestanov explained that, thus, the Ministry of Finance's grim forecast on the ruble in the first half of the year and its change to a more positive one are linked to these factors. "Oil prices have risen, because the price of $40 per barrel was put in the 2017 budget. Now we can confidently say that the average annual price will be much higher, accordingly, there will be more revenues from oil exports," the expert said.

"Most likely, the ruble's exchange rate against the dollar will be much stronger than the Ministry of Finance expected in the spring," Sergei Hestanov concluded.

The chairman of the Duma Committee on Economic Policy, Innovation and Entrepreneurship Development, deputy Anatoly Aksakov, also noted that the key factor is precisely the price of oil, which stabilized at above $50 per barrel.

"In addition, the Central Bank of Russia and the Ministry of Finance are pursuing a coordinated policy aimed at ensuring that the regulated volume of liquidity does not exert pressure on the foreign currency appreciation," he said.

The current macroeconomic situation, according to the expert, is also positive. "At the end of the year, GDP growth is expected to be at least 2%, it also works to strengthen the ruble," the chairman of the Duma Committee on Economic Policy, Innovation and Entrepreneurship Development said.

He also recalled the agreement of OPEC + on the output cuts. "The situation is stable, the demand for oil is also stable, especially as the global economy is growing, which allows us to confidently talk about the stability of oil prices. So we can predict the stability of the national currency rate as well," Anatoly Aksakov concluded.

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