RT.com
29 Jun 2022, 18:43 GMT+10
The government has been debating whether the trend is good or bad for the economy
The Russian government is split on how to handle the strengthening ruble, with the Central Bank and Finance Ministry voicing opposing views on whether the current exchange rates should be maintained.
Since its historic drop in early March when the Western sanctions were unleashed, the ruble has rallied to a seven-year high against the US dollar and the euro. The Russian currency has been bolstered by strict capital controls, soaring energy prices, and the shift to ruble payments for natural gas. However, this has led many experts and officials to wonder whether the government should intervene.
The head of Russia's Central bank, Elvira Nabiullina, who steered the economy through the fallout from the start of the conflict in Ukraine and the resulting sanctions, warned on Wednesday against weakening the ruble to pre-war levels. Any intervention would make the exchange rates artificial, lead to depreciation, and make Russia more dependent on the financial policies of other countries, she said.
At the same time, the Finance Ministry has been sounding the alarm over the exchange rate, warning that the strengthening ruble is harming the economy. Finance Minister Anton Siluanov said on Wednesday that the strong ruble is costing the Russian budget trillions, and the ministry is ready to take steps to weaken it. He suggested that the government could use the profits from oil and gas exports and savings made from reduced spending to buy foreign currency, adding that Russia could invest in the currencies of "friendly nations," now that the euro and the dollar are essentially "toxic" due to the sanctions.
The Economic Development Ministry holds a similar view, saying that the strong ruble makes export-oriented businesses unprofitable. However, according to the minister, Maxim Reshetnikov, buying foreign currency with budget savings would hit the economy hard.
Western currency strategists have been skeptical about the rallying ruble, claiming it is being kept artificially high by the government, while the economy is shrinking. Over the past few weeks, the Central Bank has relaxed some of the capital control measures to try and weaken the ruble, but it continues to get stronger. Last month, Bloomberg called the ruble the world's best-performing currency this year.
For more stories on economy & finance visit RT's business section
(RT.com)
Get a daily dose of Pakistan Telegraph news through our daily email, its complimentary and keeps you fully up to date with world and business news as well.
Publish news of your business, community or sports group, personnel appointments, major event and more by submitting a news release to Pakistan Telegraph.
More InformationZAGREB, Croatia: A massive concert by popular Croatian singer Marko Perković, known by his stage name Thompson, has drawn widespread...
WASHINGTON, D.C.: Elon Musk's entry into the political arena is drawing pushback from top U.S. officials and investors, as his decision...
CULVER CITY, California: TikTok is preparing to roll out a separate version of its app for U.S. users, as efforts to secure a sale...
WASHINGTON, D.C.: President Donald Trump claimed he was unaware that the term shylock is regarded as antisemitic when he used it in...
PARIS, France: A strike by French air traffic controllers demanding improved working conditions caused significant disruptions during...
OMAHA, Nebraska: With Congress considering cuts totaling around US$1 trillion to Medicaid over the next decade, concerns are rising...
NEW YORK, New York - U.S. and global markets showed a mixed performance in Tuesday's trading session, with some indices edging higher...
PARIS, France: French military and intelligence officials have accused China of orchestrating a covert campaign to damage the reputation...
NEW DELHI, India: Birkenstock is stepping up its efforts to protect its iconic sandals in India, as local legal representatives conducted...
HONG KONG: China has fired back at the European Union in an escalating trade dispute by imposing new restrictions on medical device...
NEW YORK, New York - Monday's trading session saw mixed performances across U.S. and global markets, with several major indices posting...
WASHINGTON, D.C.: The U.S. government has granted GE Aerospace permission to resume jet engine shipments to China's COMAC, a person...