Russian econ minister sees no fundamental reasons for weakening ruble

ASTANA. Nov 28 (Interfax) - The ruble's recent steep drop is not due to fundamental factors, as Russia's trade balance is strong, and emotions that are characteristic for the forex market will calm down, Economic Development Minister Maxim Reshetnikov said on Wednesday.

"The current weakening of the exchange rate is not related to fundamental factors. We see that the trade balance is strong. The main factors for the weakening are the dollar's strengthening against world currencies and the concerns of participants in foreign economic activities regarding future relations with counterparties amid the latest tightening of sanctions against Russia," Reshetnikov told reporters on the sidelines of a Russian-Kazakh summit in Astana.

He said it is important to note that the Russian economy is now far less dependent on settlements in the currencies of unfriendly countries. "The share of the Russian ruble and friendly countries' currencies reached 82% in exports and 78% in imports in the second half of 2024. In light of this, changes in the exchange rate have far less influence on inflation than before," Reshetnikov said.

"Furthermore, as often happens in such situations, there is currently an excessive emotional component on the forex market. Experience shows that the exchange rate always stabilizes after a period of heightened volatility.

Given the ruble's steep drop in recent days, the Central Bank announced earlier on Wednesday that it will not make purchases of foreign currency on the domestic forex market as part of the mirroring of Finance Ministry transactions under the fiscal rule from November 28 to the end of 2024. It said this decision was made to reduce volatility on financial markets.

However, the Central Bank will continue to sell forex in the amount of 8.4 billion rubles per day as part of contributions to and spending from the National Welfare Fund.

The decision to resume mirroring of the Finance Ministry's regular transactions will be made taking into account the situation on financial markets, the Central Bank said. It plans to make the deferred forex purchases over the course of 2025.