Nabiullina called the floating exchange rate of the ruble a boon
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A floating exchange rate is a boon to the economy that allows external shocks to be adjusted. About this during a speech at the financial congress “Structural transformation of the economy and financial markets” stated Chairman of the Bank of Russia Elvira Nabiullina.
“The floating rate, yes, it changes under the influence of foreign trade, we have tools to smooth out short-term fluctuations. But a floating exchange rate, in our opinion, is a blessing that allows external changes, external shocks to be more easily absorbed in the economy,” Nabiullina explained.
She noted that when the course weakens, that various conspiracy theories begin. “Almost a special easing to increase budget revenues, or some other theory. But we must first of all look at the dynamics of foreign trade. It largely determines the movement of the course. For example, the large-scale strengthening of exchange rates last year was perceived by many as such a victory over circumstances. But, we must honestly admit that this was still a consequence, first of all, of a sharp increase in exports and a decrease in imports, ”the chairman of the Central Bank clarified.
The rate is influenced by both the growth of budget spending and short-term fluctuations under the influence of geopolitics, Nabiullina stressed, the floating rate can indeed be volatile in the face of shocks, but it is important that it does not break away from the fundamentals. “Attempts to artificially maintain this rate end, and we know from our history, with periods of deep devaluation,” she said.
The Central Bank will take into account the risks and dynamics of the exchange rate, which now carries pro-inflationary risks, when making a decision on the key rate. She added that international experience shows that low predictable inflation in itself reduces exchange rate fluctuations.
The euro and dollar have been growing since the beginning of last week, after an attempted armed rebellion in Russia. July 6 dollar exchange rate exceeded 92 rub. for the first time since March 28, 2022, the euro exchange rate reached 100 rubles. for the first time since March 29, 2022.
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