“Russians won’t see him for 80 rubles for a long time”
The collapse of the Russian currency, which led to an increase in the exchange rate – the dollar during trading on February 28 exceeded the mark of 100 rubles, and the euro reached 113 rubles, forced the economic authorities to take the most radical steps. The Central Bank raised the key rates to a record level of 20%, introduced the forced sale of 80% of foreign exchange earnings by domestic exporters. What this will lead to, said Sergey Suverov, investment strategist of Arikapital Management Company.
– What are the goals of the decision of the Bank of Russia to more than double the key rate to 20%?
– An increase in the key rate, and to a record level, will certainly lead to an increase in the value of the Russian currency: it is already strengthening against the dollar and the euro during exchange trading. This is a classic method of fighting inflation, practiced by the domestic financial authorities. In fact, the Central Bank dealt a preemptive blow to the future crackdown in prices for everyday goods.
– Will such a decision help to stabilize the position of the domestic economy?
– Now the monetary policy of the Russian regulator has an extremely weak effect on inflationary parameters, significantly yielding to geopolitical factors. The decisive step of the Central Bank, although it will become a small protection against the weakening of the national currency and slow down the widespread rise in product prices, however, will not be able to completely contain the price increase. Already in March, annual inflation may reach 10-15%.
However, the government will undoubtedly take the most stringent measures to contain price spikes and establish total control over retailers, preventing a sharp increase in the cost of the most necessary goods. Including through direct negotiations with business representatives. Nevertheless, it is still necessary to prepare for a 5% increase in trade margins for the most demanded products.
– How will the increase in the key rate affect loans and deposits?
– It is clear that credit will become less available as financial institutions take advantage of the legitimate opportunity to tighten their borrowing policies. At the same time, it is possible that the state will continue to cultivate the practice of providing citizens with preferential programs for issuing loans to keep this sector of the country’s economy afloat.
In turn, it is absolutely not worth waiting for a significant increase in deposit rates. None of the Russian banks in the current situation will significantly increase their interest on private investments. Of course, there will be some increase in deposit rates, but the upward movement will most likely be insignificant. The population is unlikely to willingly incur money in banks, since in the current situation they would prefer to accumulate cash “under the pillow”: they will be a kind of guarantor of relative personal well-being. In any case, it is too late to withdraw all your ruble savings and urgently change money for foreign currency. The ruble exchange rate will continue to be volatile, and the Russians will not see the dollar even at 75-80 rubles for a long time.
– Will the decision on the mandatory sale of 80% of foreign exchange earnings by domestic exporters, which was announced by the Russian Ministry of Finance, be able to positively affect the financial situation in the country?
– Given the ban on transactions and the blocking of half of the financial accounts of the Central Bank, located in the banks of the G7 countries, as stated by the head of European diplomacy Josep Borrell, such a decision is a necessary measure. In the near future, the Bank of Russia will seriously need additional dollars and euros, including for foreign exchange transactions aimed at leveling the negative effects of new sanctions.
However, this time the restrictions imposed by the West are much tougher than all the previous ones, so the mandatory sale of even 100% of foreign exchange earnings by domestic exporters will not save the situation. Moreover, such a move would have a destabilizing effect on the Russian economy and, in the first place, on companies bound by long-term agreements with foreign partners.
Over time, it will be possible to find a way out by conducting transactions through third banks in states that do not impose sanctions against our country. Nevertheless, the incentive for exporters to work on the foreign market due to the restrictions that have arisen will obviously noticeably decrease.