From Bloomberg:
Writing in a uncommon column printed by state information company Itar-Tass, President Vladimir Putin’s chief financial adviser stated “the supply of the weakening of the ruble and the acceleration of inflation is mushy financial coverage.” Russia wants a robust ruble, and policymakers have the required instruments to normalize the foreign money worth within the close to future, he stated.
Right here’re two footage of the ruble’s change price (up is depreciation towards USD), over 5 years, during the last week.
Be aware that the present worth displays the CBR determination to cease buying international foreign money. A call is imminent on the coverage price, tomorrow 10:30am native time. The present low cost price is 8.5%. My studying of consensus of Western economists is one thing like 10% is critical by yr’s finish to stabilize the ruble (whereas then hammering the economic system; see this put up for graphical interpretation of the Russian scenario in IS-LM-BP=0).
Be aware that is all going down towards a backdrop of intense capital controls. In that context, the deteriorating commerce steadiness take’s a driver’s function.
