The authorities are discussing the possibility of implicit definition of desirable levels of exchange rate, which will partially compensate for the loss of the Federal budget from falling oil prices, reported Reuters citing two senior officials of the financial block. This would require the assistance of the Central Bank in the form of calibration of the rate and volume of currency transactions, despite the formal independence of the Central Bank from the government.
In any case, the government is not going to publicly set any targets for exchange rate, aimed at addressing fiscal problems, Reuters reports, while the Central Bank stresses that the exchange rate is determined by supply and demand in the market. But in order to influence the exchange rate to be favorable for the budget side, the Bank of Russia does not necessarily return to the public targeting the exchange rate, said one of the interlocutors of the Agency, — it is enough to adjust the pace and volume of transactions on the foreign exchange market.
In November 2014 the Bank of Russia, spending about $70 billion from its reserves to support the ruble, turned to the policy of floating exchange rate and inflation targeting. “The ruble is not fixed, and any targets at course level or rate are not set. Dynamics of the ruble is determined by the ratio of foreign currency demand and supply on the currency market”, — said on the website of the Central Bank. In other words, the ruble is not determined by any government or Central Bank. The Central Bank didn’t sell currency under the mechanism of currency interventions from January 2015.
The government hoped this year’s budget based on the average annual price of Urals oil of $50 a barrel, but so far in 2016 global oil prices hovering near $30, and Urals is even cheaper. At an oil price of $30 budget, planned with a deficit of 3% of GDP, may lose an extra up to 2.5 trillion rubles, said Finance Minister Anton Siluanov, have to use the Reserve Fund, to increase revenue base. Bank of America Merrill Lynch expected in December, at an oil price of $30 per barrel to keep the budget deficit within 3% of GDP, we need the dollar above 100 rubles, With $40/bbl. the deficit remains under 3% of GDP, if the rate is 84 rubles per dollar (for comparison, at today’s exchange rate is 78.6 rubles).
According to the source at the Finance Ministry, quoted by Reuters, the appreciation of the dollar on 1 rouble at the current price of oil adds to the revenue budget of 35-40 billion rubles.
The purposeful weakening of the ruble in the interests of the budget “could add to inflationary pressure”, warned the chief economist of BofA Merrill Lynch on Russia and the CIS Vladimir Osakovsky. Since the devaluation of the ruble, according to the Ministry, contributed more than 60% in last year’s rising prices, the impact of the authorities may go against 4% benchmark of the Bank of Russia on inflation.
The Ministry of Finance of Russia “does not discuss and does not allow for the targeted weakening of the ruble”, the press service said in response to Reuters. “On the contrary, currently we are working on measures to consolidate their budgets and reduce the Federal budget deficit. Such measures, from the point of view of the Finance Ministry, will have on the course of strengthening effect”, — stated in the message of the Ministry of Finance received .