The ruble strengthened due to falling imports and demand for the currency, but prices do not fall

The ruble strengthened due to falling imports and demand for the currency, but prices do not fall
The ruble strengthened due to falling imports and demand for the currency, but prices do not fall
19 April, 13:39Photo: Соцсети
Economists explained that the “strong ruble” phenomenon is not an indicator of financial well-being

Why do the prices of imported goods not fall to the level of February, even though the ruble has returned to February values? Economist Grigory Bazhenov answers this question in his channel:

  1. The importer's costs are not only the purchase of a consignment of goods at a market rate. It's also logistics. Now many supply channels to Russia are severely limited, logistics costs are higher, somewhere we have to rebuild the chain.
  2. As the course skyrocketed, people ran to the stores, emptying the shelves. Firms knocked down the hype by raising prices, but the shelves were still empty, and stocks had to be sold. And form new ones. New stocks - new prices. Inventory values rose above their February level.
  3. In some cases, it was not the product itself (we are talking about domestic production) that went up in price, but its components. I had to either adapt to new prices, or look for a replacement (as is the case with office paper). And these are costs.

Inflation has slowed down, the excitement subsided, they will live on already formed reserves for 3-4 months and look for a replacement. The strengthening of the exchange rate weakened the pro-inflationary factors, but not by a single exchange rate…”

The ruble is strong, but the economy is suffering

However, a strong ruble is not at all an indicator of a strong economy, says another well-known economist Sergey Guriyev:

“An important reason for the strengthening of the Russian currency is the lack of demand from importers. Indeed, after more than 600 companies refused to do business in the Russian Federation, and dozens of countries imposed sanctions, the volume of imports fell sharply. The fact that the demand for imports has fallen, there is nothing to buy, means that the demand for dollars and euros has also fallen. Which means that the ruble should strengthen. This is a sign that the Russian economy is cut off from the world and shows that there is a strong ruble, which is not a reflection of the strength of the economy. In fact, this strengthening of the ruble, associated with low demand for foreign currency, in connection with sanctions, with cut off from imports, is a strengthening of the ruble a signal that the Russian economy is suffering and will continue to suffer.

Another factor in the strengthening of the ruble is high oil and gas prices, because the Russian Federation somehow manages to sell energy resources, and exporters (according to the new rules) sell 80% of this inflow of currency on the stock exchange. “Western countries send 700-800 million euros to Russia every day. This is causing an increasing desire to impose a full or partial oil embargo”.

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