Ruble Will Fall Together With Oil Prices
// Central Bank Predicts that the Strengthening Trend of the Ruble Will Peter Out by 2011
Yesterday Russian Central Bank first deputy chairman Alexei Ulyukaev predicted the end in 2007 of "a decade of a strengthening national currency." According to the Central Bank, the ruble's rise will be brought to an end by 2011 by declining oil prices and shrinking import growth. The shrinking difference between the volumes of exports and imports (which was $140 billion in 2006) will mean that the Bank of Russia will spend less on buying up foreign currency and using it to top off the country's gold reserves. In its economic prognosis for 2008-2010, the Ministry of Trade and Economic Development agrees with Mr. Ulyukaev, but claims that the ruble will stop getting stronger by 2010, when it predicts that the ruble will be worth 32.7 to the dollar.
According to Mr. Ulyukov's calculations, the ruble's growth will be slow in 2007 in comparison to 2006, when the effective exchange rate of the ruble grew by 9.4%, fuelled by massive growth of the gold reserves. The Russian currency's growth will continue to slow until 2010, and it will stop completely in 2011. According to the Central Bank's figures, the amount of money in the economy grew by 48% in 2006, and the monetary base grew by 39%, but these indicators will shrink by 2-2.5 times over the next four years.
Experts polled by Kommersant were not entirely in agreement with the Central Bank and the Trade Ministry. Rory MacFarquhar of Goldman Sachs maintains that the dollar is on track to drop to 25.1 rubles/dollar over the next 12 months, while Vladimir Pantyushin of Renaissance Capital asserts that the ruble will continue to strengthen in the foreseeable future.
Vadim Visloguzov, Maxim Shishkin, and Alexei Shapovalov
All the Article in Russian as of Feb. 20, 2007
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