Forbes columnist explained why a weak ruble is good

Forbes columnist explained why a weak ruble is good


This might seem a strange thing to rejoice in the weakening of the national currency, however in the current situation the Russian economy is what the “doctor ordered”, says Forbes columnist Tim Worstall.

MOSCOW, 21 Jan. Forbes columnist Tim Worstall explained why the weakening of the ruble — this is what you need the Russian economy at the moment.

“This might seem strange silent greeting to the fall in the value of its currency. In the end, because of this, the inhabitants of the country become poorer. However, there are times when it (the situation with the currency — ed.) what you need, and now in Russia just such times,” — said the browser.

In his view, the weakening of the ruble, there are two positive factors.

First, he drew attention to the fact that Russia sells oil in dollars. And if in dollars the price of oil “falling rapidly”, in rubles decline is slower. This relieves at least some of the load from the Russian state budget, which is calculated in rubles.

“The weakening of the currency stimulates the purchasing power of the Kremlin. The country gets more rubles per barrel of exported oil than before. Of course, the falling oil price works in the opposite direction, but the fall of the ruble softens the effect,” he writes.

Secondly, a weak ruble, from the point of view Warchola, can have a positive impact on the Russian industry because of the need to replace imported goods with their own.

According to him, in a situation where such dependent on the export of oil and gas country, like Russia, faced with falling fuel prices, its economy is in dire need of reorientation. It is necessary that the country has produced more of the goods it previously imported.

“The weakening of the currency just this helps. This makes imports more expensive, thus the number of imported goods decreases. Domestic production becomes more profitable, so it increases. In addition, it reduces the exports of other goods not related to oil and gas. For this economy, it’s what the doctor ordered,” explained Marstal.

The night before, Euro and the us dollar has hit historical highs against the ruble, surpassing the mark of 82 and 90 rubles respectively.