Ruble could strengthen further, but not by much - Oreshkin

MOSCOW. Nov 22 (Interfax) - The ruble is currently strengthening and this trend might continue, but major deviations from the current equilibrium value should not be expected, Kremlin aide Maxim Oreshkin said.

"Everything depends on which of the mixed trends turns out to be stronger. Temporary capital outflows, repayment of foreign debt, purchases of foreign assets - the more the scale of all this decreases, the greater will be the strengthening of the Russian national currency," Oreshkin said in an interview with Moskovsky Komsomolets.

But at the same time the continued rapid growth of domestic demand could offset all this, he said.

"In sum, the ruble is now strengthening and could strengthen further. But in general one should not expect any radical deviations of the ruble's exchange rate from the current equilibrium values," Oreshkin said.

Asked about the reasons for the ruble's steep decline in 2023 after its sharp rise in 2022, he said the weakening of the ruble in the middle of this year "foremost shows that our domestic demand has actively recovered."

"If you look at the latest data for the third quarter, retail sales increased by 11.3% in real terms. In September growth amounted to 12.2%. Investment grew by 12.6% in the second quarter. Obviously this recovery of consumer and investment demand led to the growth of demand for imported products. At the same time, oil and gas prices this year were lower than they were last year. Against this backdrop, the ruble naturally corrected," Oreshkin said.

The exchange rate also "overshot" to an extent in the direction of the ruble's depreciation, primarily due to phenomena that the Russian economy has been facing recently, such as repayment of some foreign debts by exporters, the need to increase financing for buyers of Russian goods abroad, and foreign companies' departure from the Russian market and the purchase of their assets by Russian investors, Oreshkin said.

"All this together increased demand for foreign currency and led to the weakening of the ruble," Oreshkin said, explaining why at one point the ruble weakened more than expected.

"Now we're seeing that these temporarily capital outflows are beginning to decrease. The balance of payments is stabilizing and the ruble is now demonstrating an upward trend," Oreshkin said.