The government and the Central Bank continued the dispute over measures to strengthen the ruble

The government and the Central Bank need “more complex solutions” aimed at limiting capital movements to stabilize the ruble exchange rate. This was stated by Minister of Economic Development Maxim Reshetnikov during his speech at the plenary meeting of the Moscow Financial Forum.

According to him, the rate of return of export revenue based on the results of monitoring the operations of 42 Russian holdings is at the level of 85%, but this does not solve the problem of volatility in the foreign exchange market.

“It seems to me that we need to develop some more complex solutions here. <…> It seems to me that we can calculate some restrictions that most countries of the world accept and can at least discuss,” he said.

Among specific proposals, Reshetnikov voiced control “or at least monitoring” of translations. In his opinion, even a temporary restriction on the movement of capital can help improve the situation. Otherwise, “we will constantly have to pay a higher rate for openness,” the minister added.

The head of the Central Bank, Elvira Nabiullina, noted that before introducing restrictions, it is necessary to calculate the risks that they will entail for business. In addition, “all restrictions are bypassed,” she added.

According to her, the good economic indicators in 2022 are related to how quickly businesses were able to adapt to the sanctions by building new supply chains, while new restrictions will only complicate the work of entrepreneurs.

The reason for the rise in inflation was domestic demand, “which was fueled by soft budget and soft monetary policies,” Nabiullina said.

Demand is growing faster than supply can grow, so it is necessary to achieve a balance between them so that this does not result in rising inflation and a weakening of the exchange rate, the head of the Central Bank is sure.

Nabiullina admitted that the regulator’s increase in the key rate has not yet had a noticeable effect on the ruble, however, in her opinion, if the rate had remained at 7.5-8.5%, the rate would now be weaker. To strengthen the national currency, economic incentives are needed to increase the attractiveness of ruble savings, says the head of the regulator.

“I am against taking action just to show that we have done something with the course. We need to see how effective it is, that it will work,” she concluded.

Finance Minister Anton Siluanov noted that it is important for all departments that the ruble is stable and predictable. “I read the right idea on inflation on the Internet. It says that if you don’t buy, then the prices are normal. The point is that there is no need to accelerate consumer demand,” he said.