Returning to the USSR: Professor Zubets spoke about the emergence of two dollar exchange rates

We buy goods for expensive currency, export for cheap

The government has been trying to return the ruble exchange rate to 70 per dollar for several months now. Alas, nothing has worked out yet. Even with the key rate raised to 13%, it remained entrenched at best. But at what level? 96 for an “American” will be too much…

However, our ruble cannot be strengthened by a single interest rate. The Ministry of Economic Development invites the government to pay attention to the “Chinese membrane”. And with its help, cope with the volatility of the domestic currency.

According to the head of the department, Maxim Reshetnikov, an analogue of the Chinese model, taking into account Russian characteristics, could become a solution to the problem with the ruble exchange rate. Experience shows that high volatility and inflation cannot be overcome only by the key rate and the introduction of the mandatory sale of foreign currency earnings. It is already at a high level – 85%. We need a “membrane” between the domestic and foreign ruble markets.

The minister made this statement at an extended meeting of the Federation Council Committee on Economic Policy. He emphasized that this position is exclusively of the Ministry of Economy of the Russian Federation, which is being discussed with the Central Bank. And he clarified that “under no circumstances can we have two ruble exchange rates.”

So, a Chinese model is looming on the horizon, which may be repeating the Soviet one.

Russians of the older generation remember that in the USSR there were two exchange rates for the ruble – internal and external. Internally, we received salaries and bought goods in stores. And the external one was for trade with foreign partners and, by the way, at that exchange rate, the dollar was cheaper than the “full-weight” Soviet ruble. It seems that for an “American” they gave 70 Soviet kopecks. Although on the “black” foreign exchange market they gave 15-20 rubles per dollar. And the sellers themselves could face very long prison terms and even receive capital punishment.

– Is the Ministry of Economic Development proposing approximately the same scheme? – I ask Doctor of Economics, Director of the Institute of Socio-Economic Research of the Financial University under the Government of the Russian Federation Alexei Zubets.

“The point in the proposal is that there should not be two rubles in the country,” he explains. – There should be one, but between them there is some kind of “membrane” that will convert the flow of the external and internal ruble markets. But it is quite obvious that the domestic ruble will be cheaper than the foreign one. In fact, it still results in the appearance of two rubles. No matter how this “membrane” is built, in any case there will be two courses and the opportunity to play on these courses. Therefore, the proposal of the Ministry of Economy with reference to the Chinese experience is not entirely clear to me. There are no two rates of Chinese yuan. There is exchange trading of Chinese currency in Hong Kong, and there is a set rate on the Chinese mainland. However, it does not differ from the market value by more than 2%.

– Why is this being done?

– To avoid volatility of the yuan within one day. On the stock exchange, it can change its rate as much as you like, but then it is fixed for mainland China. In short, there is only one course: more stringent for domestic trade and less for foreign trade. In my opinion, talk about two ruble exchange rates is disingenuous.

– But why don’t we install such a “membrane”?

– According to the economic department, a large number of rubles are accumulating abroad, since we are gradually switching to national currencies in settlements with foreign partners. These rubles can be presented on the domestic market to buy dollars or euros. But it is not enough, since we trade in rubles. The second story is about importers who buy goods abroad. They need dollars, since payments are made in them. If we have been fighting for so long to de-dollarize our economy, why today blame the volatility of the ruble on the transition to national currencies in trade? It seems to me that this is an excuse for not introducing mandatory sales of dollars for exporters.

80% of foreign trade is carried out in foreign currencies: dollars, euros, yuan. For some reason, the Central Bank and the government do not want to introduce mandatory sales of hard currency. Hence the talk that foreigners have a large amount of rubles and we need to somehow defend ourselves. If we introduce such a “membrane”, if our partners understand that they will not have the right to convert rubles into foreign currency, no one will trade with us for rubles. We have free ruble conversion. Foreigners can hold ruble assets in the country. The adopted model is the same as with any other convertible currency. And this is the best option.

Vladimir Chuprin