In December, the Central Bank of Russia sharply raised the key rate to 17%, and exporting enterprises, in order to maintain the ruble exchange rate at the proper level, agreed to sell foreign currency on the market. However, most economic analysts agree that these measures will be effective within a very short period of time, and in early 2015 the Russian national currency will face new strength tests. So what measures of influence on the ruble exchange rate are proposed by leading Russian economic experts.
Remove major players from the foreign exchange market
It is proposed to leave only foreign exchange speculators on the market, and state and large private companies with foreign exchange earnings should be withdrawn from the market. It will be necessary to individually negotiate with exporting enterprises and establish an individual exchange rate.
If large companies leave the foreign exchange market, it will shrink significantly. In this case, the Central Bank of Russia will be able to maintain a stable ruble exchange rate with small foreign exchange interventions.
This technique is widespread in many countries of the world. In this case, the ruble exchange rate is transferred to the manual control of the Central Bank. Often, the general public is unaware of the agreement between large exporting companies and the state.
Oral foreign exchange intervention
Verbal foreign exchange interventions are very often used in many countries of the world. This does not require issuing special decrees and passing laws. However, the capabilities of the Central Bank of Russia in this case are very limited. Unfortunately, in Russia there is no channel to which there would be absolute trust on the part of the population, market and business.
Restrictive measures
If the population ceases to trust banks, then there will be a massive withdrawal of foreign currency deposits. In this case, an attempt can be made to limit the outflow of currency from the accounts of depositors. It is possible to introduce various restrictions.
However, the positive results from such measures are extremely short-lived. It will be much more difficult to restore trust in banks later. This process can drag on for many years.
Increase in the key interest rate
According to some leading economists, one should not expect a sharp cut in the key rate in the first quarter of 2015. Some even predict even its further increase. This measure helps to make money more expensive for banks, and the demand for currency is limited in the foreign exchange market.
Stop refinancing
If the Central Bank stops refinancing loans with an expiring maturity, this may lead to the fact that market participants will be forced to sell their currency. A strategy like this has already helped save the foreign exchange market from a crash in 2009.
Introduction of a currency band
In November 2014, the Central Bank of Russia actually released the ruble exchange rate into free float. It is unlikely that in the current economic conditions a return of the currency band is possible, since its maintenance requires large financial costs.
The ruble is currently under pressure. Sanctions and the fall in world oil prices played an important role. It turns out that the only most effective method to strengthen the ruble and reduce inflation is to restore economic growth.
