Government Practically Announced Accelerated Devaluation of Rouble

The government and Central Bank (CB) of the Russian Federation do not plan to support dollar exchange rate artificially. Such application was made by the first vice-premier of the Russian Federation Igor Shuvalov at a briefing in Moscow. "We didn't have and don't have such plans", - he said. At this I.Shuvalov emphasized that function of Bank of Russia - to provide stability of national currency. The first vice-premier noted that he considered criticism of a policy of Central Bank which spent big amounts on maintenance of rouble exchange rate not constructive. "Reserves are necessary also for such purposes", - he noticed.

Besides I.Shuvalov noticed that "smooth rate movement allowed everybody who wished to exchange rouble into dollar". "Everybody who wanted to convert his means made such a decision and realized it", - he concluded.

Earlier the first vice-president of Bank of Russia Alexey Uljukaev declared, RBC informs, that Central Bank of the Russian Federation was not going to cancel border of fluctuation of rouble cost of dual-currency basket, however the corridor would extend further. "We shall not start up rouble in free flotation, however we shall expand the corridor of allowable fluctuations of rouble cost of dual-currency basket. The corridor will be rather wide, it will be partially free or quasi free floatation", - A.Uljukaev noted.

Thus vice-premier, Minister of Finance of the Russian Federation Alexey Kudrin declared at the end of the last week that he approved actions of Central Bank on expansion of the corridor of allowable fluctuations of rouble cost of dual-currency basket. Answering a question, whether such things would take place further, minister noted that it would depend on a macroeconomic situation.

From editorial board: The words of the supreme financial heads of the RF show that either they use words to hide something important, or their words simply mask the fact that they ceased to control situation long time ago and do not quite realize what's happening.

Let's look unbiassedly: Shuvalov says that Central Bank will not support dollar exchange rate - it is possible to believe in it. A pier, they supported it earlier, but now would stop - besides there's no reason for it, dollar does not fall now in general. While his words that Central Bank earlier did not support dollar exchange rate were not even lies but denying of obvious to everybody thing which rather long time had been happening in front of our very eyes. Now it turns out there was nothing of the kind... It would be desirable to look at that businessman who would began planning something basing on the words of this first vice-premier.

Uljukaev's words also vividly remind warrant officer from a joke who spoke: "Crocodiles fly but very low-down". Partially free floatation, quasi free explanation of own ideas.

Nothing could be said about Kudrin - he approves, though earlier he didn't and then he would also not approve, if the situation would not force to approve...

In fact everything's very simple: economy of Russia is entirely fastened on literally some export positions, oil and gas are the main among them. All home market of the RF is a reflection of distribution of incomes of foreign trade in hydrocarbons inside the country. Rouble is a payment mean inside the country and no more than that. All conversations about convertibility of rouble, its role as reserve currency and so on are simply "quasi words in partially free falling". Yes, for the time it's possible to exchange rouble for dollar but already today return procedure is much easier.

Consumer market in Russia for 80 percent is formed by import and impoverishment of a stream of this import will be unequivocal accompanied by depreciation of rouble -it has no direct relation to dollar or euro, in hard currency internal prices cannot be essentially different from Central European ones. It means that "superfluous" consumers who today drop out of a chain of redistribution of the natural rent would be cut from the consumer market by growth of rouble inflation. Actually rouble has been already devaluating, only, as Shuvalov said, smoothly - so that the ones who have something could exchange it into dollars. The ones who have nothing to exchange - will pass to more modest standard of consumption (Doshirak, potato, groats).

Mr. Shuvalov, by the way, made it precisely clear who Putin's government took care of first of all... who, to put it mildly, went on the second place.

А.B.

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