Stop the engine! The Central Bank and officials are already afraid of the collapse of the ruble

Ekaterina Maximova

From today, from August 10, until the end of 2023, the Bank of Russia will not buy currency (yuan) on the domestic market.

«The decision on the resumption by the Bank of Russia of operations on the domestic market for the purchase of foreign currency within the framework of the mechanism of the budget rule will be made taking into account the actual situation in the financial markets, » follows from the official statement of the Central Bank.

This is an important and encouraging signal for the national currency, the collapse of which has been going on for several weeks in a row. Earlier, the regulator stated that the estimated volume of purchased currency for the month (from August 7 to September 6) would reach 40.5 billion rubles, that is, the agency planned to buy currency and gold for about 1.8 billion rubles daily.

«Now these purchases have been canceled. The net supply of yuan from the Central Bank in the market increases from 0.5 to 2.3 billion rubles per day. This is not enough to stop the collapse of the ruble. But at least something… the dollar/ruble, which rose above 98, went slightly below 97 on this news, » MMI analysts note.

«In quantitative terms, the Central Bank's decision will not be so noticeable, but the regulator's position may somewhat cool the ardor of currency buyers. We do not rule out that potential inflationary risks and a surge in inflation expectations in the event of a further advance of the dollar to triple—digit levels may not only force the Central Bank to increase the step of raising the key rate in September, but also force it to tighten currency restrictions now to ease pressure on the ruble, » said the head of the Department of Analysis of banks and money market IC «Veles Capital» Yuri Kravchenko.

Investment banker, HSE Professor Yevgeny Kogan compared the Central Bank's decision to pause the purchase of yuan with the principle of «do not hit a recumbent».

«In the event of a breakdown of a very important psychological level of 100, importers can start seriously recalculating prices again and again. And the population can get nervous. And here a rather rigid version of the transition from quantity to quality can work. So… the current level needs to be kept. Not up to sentimentality, » Kogan summed up.

Meanwhile, the former adviser to the President of Russia, academician of the Russian Academy of Sciences Sergey Glazyev, in his tg channel, directly accused the Central Bank that the current collapse of the ruble is connected with financial fraud.

«It is obvious that periodic devaluations of the ruble are arranged by the management of the Bank of Russia for the sake of over-enriching their partners. This was proved by me when studying the circumstances of the collapse of the ruble exchange rate at the end of 2014. All my demands for an investigation into the facts of market manipulation by the Central Bank management were rejected. I am sure that behind every collapse of the ruble and the export of profits received on this abroad are the commercial interests of financial speculators, who are patronized by the Central Bank management. And this continues now, during the conflict with the West. Last year, the heads of our Central Bank shipped 300 billion to the enemy.reserves and 240 billion dollars were allowed to be left there by foreign trade participants, » says Academician Glazyev.

The Central Bank also called on the Deputy Speaker of the State Duma, Alexander Babakov, to «come to his senses» and act immediately.

«The ruble has been breaking through the 97 rubles per dollar mark in recent days. They say that the reason is the „deterioration of the foreign trade balance.“ Yes, the balance of Russia's foreign trade has changed this year. However, all the „deterioration“ is expressed in the fact that the surplus has ceased to be huge and remains simply large — tens of billions of dollars. To consider the reduction of the foreign trade surplus as the basis for the devaluation of the ruble by 37,5% (since December last year) — some kind of too bold statement, » Babakov said.

Especially for the Central Bank, the parliamentarian recalled that «the falling ruble not only devalues growing incomes and investment programs, but also creates an „automatic attack“ of the entire global financial market against the ruble. And the argument that „the fall of the ruble helps to fill the budget“ is either a sincere delusion or guile.

«The fall of the ruble does not fill the budget, but dilutes and dilutes the budget. Each ruble, which contains about 40% of consumer and investment imports, is getting weaker. Finally, the falling ruble creates serious inflation, » Babkov notes.

And he adds: stagnation in the current conditions is not just bad. This means leveling all the achievements of the economy over the past year and suppressing the growth potential.

He called for restoring the return of foreign exchange earnings to the country in order to further strengthen the ruble exchange rate. Another measure to strengthen the ruble exchange rate should be the strengthening of currency control in the domestic market.

Boris Titov, the Commissioner for the Rights of Entrepreneurs under the President of the Russian Federation, also spoke quite harshly.

«The current monetary policy does not give a chance for the emergence of a developed and diverse domestic production in a couple of years. For sure, the Central Bank employs very strong professional financiers, but no one has set such a goal for them. The goal, as we all remember, is inflation of 4%, the rest does not matter. But, you see, diseases are not treated with painkillers alone. We need real medicines. The temperature will rise significantly for a while, but the body will begin to recover. By continuing to keep the key rate high, we will be able to „stabilize“ only the budget deficit and economic degradation. The funds accumulated on deposits in banks and the Central Bank are still not enough to patch up all the holes. We will be able to win only at the expense of the internal energy of development achieved thanks to cheap credit resources, » Titov said for BRIEF.