Ruble volatility rises owing to issues on forming exchange rate; fundamentally remains within forecast - econ minister
KAZAN. Oct 22 (Interfax) - Russia maintains "a very robust trade balance", and the volatility of the ruble has increased significantly owing to current financial flows and issues on forming the exchange rate, though the rate remains fundamentally within the forecast, Economic Development Minister Maxim Reshetnikov told reporters on the sidelines of the BRICS summit in Kazan.
"There's the average annual exchange rate, and there's the end-of-year forecast. We look at the current trade balance first of all and we realize that fundamentally the situation is unfolding the way we predicted," Reshetnikov said in reply to a comment that the Economic Development Ministry's 2024 forecast for the dollar exchange rate predicted 93.8 rubles at the end of the year yet the current rate is around 96 rubles.
"So we understand that we have a very robust trade balance, exports are good, we are importing," he said.
"Yes, there are certain issues with different countries - payments have an impact, and it's clear that under different circumstances our imports and exports would probably be higher. But overall, the situation is developing as we predicted," he said.
"These fluctuations that we are seeing are fluctuations related to financial flows, and among other things, to issues on forming the exchange rate. We understand that volatility has significantly increased because there is no market mechanism, and accordingly no financial institutions, that make it possible to smooth it out. So any large purchases by exporters or importers immediately lead to a certain level of volatility, as everything has to be processed through banks. Overall, everything is fundamentally [within the forecast], but volatility is higher. We must not forget that our large companies continue to fulfil obligations on financial resources they attracted previously, repaying loans, including those taken in foreign currency, and this also contributes to a certain capital outflow, which has always existed. At the same time, lending within our financial system is growing," he said regarding the reasons for the ruble's increased volatility.
"Predicting the exchange rate is a thankless task. The market is the way it is. The government takes measures, including changing the ratios for returning export revenue," Reshetnikov said in response to a question as to what exchange rate he expects at the end of the year.
"Everything depends on the situation with the balance of payments. How many goods we sell, how many we buy, and what capital flows exit the country determine the exchange rate. Our exchange rate is not fixed, it is market-based, and thus it depends on the flows of goods and capital," Finance Minister Anton Siluanov said regarding the possible dynamics of the exchange rate.
Siluanov also said that it is important for the Finance Ministry that everything planned and included in the budget is implemented. "This will be done regardless of the ruble exchange rate," he said in response to how well the current exchange rate suits the budget.
As reported, in September the Economic Development Ministry forecast an average annual ruble-dollar exchange rate in 2024 of 91.2 rubles/$1, in 2025 - 96.5 rubles/1$, in 2026 - 100.0 rubles/$1 and in 2027 - 103.2 rubles/$1.
In September, the ministry forecast for the end of 2024 that the ruble-dollar exchange rate will be 93.8 rubles/$1 and the euro rate will be 102.7 rubles/EUR1. At the end of 2025 it predicts 98.7 rubles/$1 and 109.6 rubles/EUR1, at the end of 2026 - 101.1 rubles/$1 and 112.3 rubles/EUR1, at the end of 2027 - 105.0 rubles/$1 and 117.2 rubles/EUR1.
