Targeting ruble rate would be wrong, but mechanism needed to normalize it - Shokhin
MOSCOW. June 30 (Interfax) - Targeting the ruble's exchange rate would be wrong, but systemic measures need to be worked out to normalize the exchange rate and bring it within the range of 70-80 rubles/$1 that the Russian government sees as optimal, the head of the Russian Union of Industrialists and Entrepreneurs (RSPP), Alexander Sokhin said on Wednesday.
One such measure would be maximum liberalization of currency controls by the state, as "businesses will manage to work something out themselves," Shokhin said at a briefing after the RSPP congress.
"Targeting the exchange rate would probably indeed be wrong, but [we need] to find ways to prevent the strengthening of the ruble. This way we'll go down to 60 kopecks per dollar and we'll have complete deforexization of the country," he said.
"For the budget, it would be ideal if by some luck the exchange rate [of the dollar] was suddenly 70-75 rubles or even 80 rubles, and exporters would also be pleased. But we see that there is no such mechanism, since there is the position formulated by the government [...], that there is some optimal level toward we need to strive. How to strive? Here we come up against the position of the Central Bank, which [Central Bank chief] Elvira Nabiullina confirmed today, that the market should determine, the exchange rate must be floating," Shokhin said.
"But it's one thing to float in a calm river, even if with a clearly pronounced current, and another to float in a turbulent torrent when you don't know where you'll be carried," he said.
Finance Minister Anton Siluanov said at the RSPP congress that the government will consider the issue of stabilizing the ruble's exchange rate next week.
Russia is not yet ready to abandon ties to the dollar and euro, Shokhin said. "At one time Anton Siluanov said what the dollar and euro are - toxic paper, it's better to get rid of them. But nonetheless, for now exports are flowing and, among other things, we do not have a broad range of instruments such as a collective currency, such as SDRs for BRICS countries, for example. Or the system for working in national currencies is not sufficiently well organized yet, since some exchange pairs need to be established here, the Central Bank should intervene in this so that Turkish lira, for example, can be hedged in some way, considering that we have high inflation, or switch to yuan as a unit for payment relations, and so on," he said.
"Actually, we need to answer these questions fairly quickly and work out a system of currency regulation that is as liberal as possible [...] and work out a somewhat different system of payment and settlement relations," Shokhin said, adding that Russia depends a great deal on its partners in the latter matter.
Speaking about liberalizing currency regulation, he generally backed the position that Evraz shareholder Alexander Abramov voiced at the congress on Wednesday, that it is necessary to "eliminate control" in currency regulation.
"My colleagues are calling for liberalizing everything as much as possible [...]. More freedom needs to be given here, maybe businesses will manage to work something out themselves," Shokhin said, adding that right now getting any permit from the authorities requires a public request, and such publicity itself is risky amid sanctions.
"We need to give businesses the chance to extricate themselves, slip through, without fearing that, say, financial monitoring or the Federal Tax Service will grab them by the arm," he said.
Another option for improving the situation with the exchange rate would be to increase imports, but the "problem of critical imports will take a long time to solve" because new supply chains need to be established with "fronts" between Russian companies and foreign suppliers, Shokhin said, adding that the latter, even those in friendly countries, are often afraid of working directly with counterparties from Russia and prefer to preserve their access to global markets. Parallel imports will not fully offset the drop in imports, he said.