Elvira Nabiullina explained the fall of the ruble – Kommersant

The head of the Bank of Russia Elvira Nabiullina commented on the fall of the ruble. She sees the reason for the weakening of the national currency in changes in the dynamics of foreign trade and the growing budget deficit. The head of the regulator noted that the weakening of the ruble carries pro-inflationary risks for Russia, and the Central Bank will take the situation into account when deciding on the key rate (now it is 7.5%). At the same time, she considers the existing monetary policy to be effective.

“Many perceived the strengthening of the exchange rate last year as a victory over circumstances. But we must honestly admit that this was still the result of a sharp increase in exports and a decrease in imports,” said Ms. Nabiullina at the Financial Congress of the Central Bank.

She called the floating exchange rate a boon that allows the economy “to more easily absorb external shocks and changes.” “There is no need to build conspiracy theories about a weak ruble in the interests of the budget,” the head of the Central Bank emphasized.

Ms. Nabiullina also denied the information that the ruble was weakened by the government intentionally in the interests of the budget. She noted that in addition to reducing the foreign trade surplus, the weakening is also influenced by growing budget spending and geopolitics.

According to her, inflationary shocks occur in Russia more often than in other countries, however, the credibility of the regulator, however, is growing, which is reflected, among other things, in the dynamics of lending.

According to Elvira Nabiullina, the Central Bank will take into account the risks and dynamics of the exchange rate when making a decision on the key rate. She added that low predictable inflation in itself reduces exchange rate fluctuations, as evidenced by international experience. Earlier, Deputy Chairman of the Central Bank Alexei Zabotkin reported that the Central Bank may raise the key rate at the next meeting on July 21 from the current level of 7.50%.

The ruble exchange rate began to weaken since the beginning of summer. On June 1, the European currency was trading at 86.6 rubles, the American – 71.8 rubles. Euro and dollar have been growing since the beginning of last week. Euro exchange rate this morning exceeded RUB 102/€ for the first time since March 28, 2022. The dollar is trading above 93 rubles/$.