Deputy Chairman of the Central Bank Zabotkin could not clearly explain what factors are pushing the national currency down
The government did not publicize concerns about the ruble exchange rate, which came close to the mark of 100 rubles per dollar, and inflation parameters. At a meeting on economic issues, Mikhail Mishustin listed positive trends in the economy. However, the composition of the participants in the meeting, which included representatives of the Central Bank and relevant departments responsible for monetary policy, is beyond doubt: sensitive issues were discussed behind closed doors.
It was interesting to watch the faces of officials, most of whom were either visibly nervous or tried to hide their real emotions from the cameras.
Central Bank Governor Elvira Nabiullina at a government meeting. Photo: screenshot from video.
Mikhail Mishustin does not often hold meetings on economic issues. Typically, this format is used by the president, and the head of the cabinet, along with the rest of the participants, acts as a co-speaker.
The last time Putin discussed economic issues with the ministers was on July 25. By that time, the ruble had already been actively falling for a long time, but the topic was not even touched upon in the open part. The head of state only drew attention to signs of accelerating inflation, linking the rise in prices with an imbalance in supply and demand, and demanded that the government maintain stability. The main part of the meeting was devoted to positive trends in the economy.
Although the collapse of the national currency finally and irrevocably buried the forecast of the Ministry of Economic Development of the average annual rate of 76.5 rubles per dollar (as well as several other forecasts, including inflation), officials continue to pretend that nothing out of the ordinary is happening and grab their heads no reason.
The dollar in Russia has long been declared a hostile and practically useless currency — so why pay so much attention to it? “This is ordinary volatility,” the relevant departments have been explaining for several months now, and for those who are especially slow to understand, they clarify that there are no fundamental reasons for the depreciation of the ruble and nothing threatens financial stability either.
But this week, even hard-core loyalists have begun to chafe at that calmness. TV presenter Vladimir Solovyov recently said that the Central Bank «turned the whole country on its ears», but categorically does not want to explain itself to the people. “Why is the rate jumping so much that the whole foreign country is now laughing at us?”, “What happened, what is the rate like?” — the TV presenter was indignant, pointing out the most obvious risks. A high exchange rate means high prices. «At the same time, the peak will just fall during the election campaign,» he specified.
Similar arguments (and condemnations) can also be seen on other loyal resources.
Answers to Solovyov's questions, in theory, could have been heard at an economic meeting that suddenly appeared on the White House schedule. On the eve of the Central Bank has already announced that until the end of the year it stops the purchase of foreign currency (yuan) for the Ministry of Finance under the budget rule and continues to sell foreign currency (yuan) for 2.3 billion rubles a day.
This measure was supposed to support the ruble and stabilize the exchange rate, at least in the short term. But the expectations did not come true: on Friday, the dollar soared again to the peaks of March 2022, slowing down a millimeter from the psychological mark of 100 rubles per dollar.
Analysts agree that the authorities still have tools able to have an effective impact on the market. However, contrary to expectations, this issue was not discussed at all in the open part of the meeting.
Following a tradition that can rightfully be called stable, Mikhail Mishustin listed positive trends and figures without delving into their analysis. The Prime Minister stressed that according to the results of the first half of the year, the Russian Federation reached positive values for all key indicators. GDP increased by 1.5%, with the main increase coming from the second quarter, when the growth was 4.6%.
“The dynamics in industrial production was even more active. According to the results of the first half of the year, it added about 2.5%,” Mishustin said. The main contribution, according to him, was made by manufacturing industries, where growth exceeded 6%. For example, the head of the Cabinet chose the most positive month — June — when the indicator grew by 13% in annual terms.
Mishustin also said that the budgetary situation is gradually improving — non-oil and gas and oil and gas revenues have gone up. Here he already operated with indicators for seven months. As an example, he referred to July, when non-oil and gas revenues grew by a third, and oil and gas revenues added 5% to the same period last year, “exceeding the figure approved by the budget rule by 73 billion rubles.”
It should be noted that the meeting participants met these figures without much enthusiasm. Only the head of the Ministry of Economic Development, Maxim Reshetnikov, actively nodded his head.
Finance Minister Anton Siluanov did not raise his eyes from the table at all, concentrating on the pen, which he twisted between his fingers. Aide to the President, Maxim Oreshkin, froze opposite him in approximately the same position. The head of the Central Bank, Elvira Nabiullina, leaned on her hand in a detached way, trying not to look at the cameras and at the same time not to meet the eyes of anyone present. The expression on her face could be described in a few words, but there would be hardly any optimism among them.
Anton Siluanov at a government meeting. Photo: screenshot from video.
In addition to ministers and the head of the Central Bank, there were people at the table whose participation in the meeting transparently hinted that not only positive statistics would be discussed. Together with Siluanov, his deputy Vladimir Kolychev came to the White House, in charge of long-term budget forecasting, risks of the budget system, as well as issues of monetary and macroeconomic policy. Maxim Reshetnikov took Polina Kryuchkova, Deputy for Macroeconomics, with him. And Elvira Nabiullina is Deputy Chairman of the Central Bank Alexei Zabotkin, who is responsible for inflation, exchange rate, and much more.
Obviously, the effect that the collapse of the national currency has on prices is seriously worrying the government . Inflation is not an indicator that can be seamlessly blurred by adjusting the calculation formula or its components.
However, the situation is alarming. Even if you rely on official statistics. As Alexei Zabotkin said after visiting the White House, annual inflation is already in the upper range of the forecast, which is 5-6.5%. The deputy chairman of the Central Bank could not clearly explain what factors continue to push the ruble down. However, he repeated the favorite thesis of officials that this weakening does not pose risks to financial stability.