Analyst Drozdov called raising the key rate useless for the ruble

The national currency will continue to weaken, and inflation will continue to rise

The Central Bank raised the key rate to 13%. Let’s leave aside the heated discussions among scientists about whether this is good or bad for the economy. Theoretically, it is believed that the increase in the Central Bank rate strengthens the ruble, which has recently weakened completely. “MK” decided to find out from the experts: how will our national currency react to the decision of the Central Bank, will a new increase in the interest rate benefit the “rubles”?

You don’t have to look far for examples. Let us remember February-March 2022, when, as a result of the “nuclear” sanctions imposed on Russia due to the beginning of the SVO, the ruble fell in price by almost half – from 71 per dollar to 121. And only after the Central Bank raised the key rate to 20% (increasing its by 10.5%!), it very soon returned to its previous values. And later it even strengthened so much that the dollar was worth 50-53 rubles.

Will such an economic miracle happen this time?

Frankly, the ruble exchange rate for Russians has not a virtual, but a real meaning. Prices in stores depend on it, rising by leaps and bounds.

“As a result of the press conference, I did not hear a word from the regulator in support of the ruble exchange rate,” says financial analyst Sergei Drozdov. – On the contrary, there were many different justifications for not taking active steps in this direction. It can be assumed that the government is quite happy with the current situation.

This does not mean that the ruble will “fly away” to 120 per dollar, like a year ago. But we can assume that the economic block of the government forms a certain currency range.

– With what boundaries?

– The upper limit is 121.75 rubles per dollar, and the lower one is 92.4. Without new input from the Ministry of Finance and the Central Bank, we will live, plus or minus, in this paradigm.

– But it is believed that raising the key rate will inevitably lead to a strengthening of the ruble. This is true?

– Not under current conditions. Without additional measures it will not lead to such a result. There is a striking example of this – Türkiye. There the rate was raised high, and the lira fell significantly. We also need to look at the state of the economy as a whole.

– In February-March last year, we managed once or twice with the dollar exchange rate, put it, so to speak, in its place. What’s stopping you now?

“Then, in addition to the key rate, we obliged exporters to sell 80% of foreign currency earnings. In addition, we introduced a 20% commission on the purchase of foreign currency. Currently no such measures are being taken.

– Then why was she promoted at all?

– We can partially agree with the decision of the Central Bank. Amid all the budget expenditures, the government needs money. Since the end of last year and during the current period, a lot of funds have been poured into the economy, “overheating” is observed in certain sectors of the national economy, mortgages are going through the roof…

– Your forecast: what will we see the ruble exchange rate in the near future?

– It’s useless to guess. When last year it was in the range of 50-60 per dollar, one could accurately assume that it would return to around 80. Everything was obvious. Now we can only talk about the wide range in which we will “swim”.

Igor Nikolaev, chief researcher at the Institute of Economics of the Russian Academy of Sciences, also does not undertake to predict the exchange rate of the national currency.

“Strengthening of the ruble is possible, but only in the short term,” he believes. – As a rule, market participants always react to an increase in interest rates. But then it turns out that the tendency towards a weakening of the ruble remains, it has not gone away. It has other powerful reasons that the key rate does not address. A reduction in exports, an increase in imports, plus pumping the economy with budget money… We are influencing only one of the factors that predetermines inflation. Therefore, the ruble will continue to weaken and inflation will rise.