The business Ombudsman explained the benefits of an undervalued exchange rate

Ombudsman for entrepreneurs Boris Titov

Federal business Ombudsman Boris Titov believes that the Russian economy best low rate of the ruble. “For an economy which must strive to reduce costs, the growth stage is more profitable to have rate lower than the steady real effective exchange rate of the ruble,” said Titov on Wednesday, July 20, at a press conference in Moscow, reports RBC.

The Ombudsman explained that the low rate of national currency necessary to move from commodity exports to exports of products with high added value and thus to overcome the stagnation of domestic demand. Titov also believes that the Bank of Russia should make efforts to curb the ruble exchange rate and use foreign exchange reserves to reduce exchange rate volatility.

18 July meeting with the President of Russia Boris Titov told me that the ruble is one of the most pressing issues for the business community. “More than 80% of entrepreneurs said that due to changes in the economic situation situation of their companies has not improved,” said Titov, according to a transcript on the Kremlin website. The President noted that the strengthening of the ruble, “not all entrepreneurs are good.” “Those who have to import, it is not like, and those costs is in roubles, and sells abroad, just a weak national currency is more profitable. Need to find a balance between these interests”, said Vladimir Putin.

The day before, July 19, Vladimir Putin President Vladimir Putin said that the Russian authorities should pay attention to how to act in the conditions of strengthening of the ruble. “The ruble strengthened, despite the price volatility in commodity markets, and in this regard we need to think about how and what we will do in the near future in connection with these factors,” the President said at a meeting with Prime Minister Dmitry Medvedev. Bloomberg called Putin’s statement “verbal intervention,” noting that the falling ruble, the price of Brent crude oil complicates the content of the budget.

Today, the press Secretary of the President Dmitry Peskov said that the strengthening of the ruble requires a “fine tuning” in export-oriented industries. It is about finding the balance that is entirely not to take in support of one economy at the expense of another, he added.

After the devaluation in 2014-2015, the Russian currency has risen by 16% since the beginning of 2016 the second best result among currencies of developing countries. Yesterday, after the words of Putin, the ruble has fallen, but is now trading near the level of yesterday’s closing 63,53 RUB per $1 as of 16:00 GMT.

Previously, the Ministry forecasted that in the second half of the strengthening of the ruble will continue due to world market conditions and investor interest in the Russian currency. The current forecast average annual exchange rate is at the level of 67.2 RUB. for $1, but in the second quarter the rate was already 65,9 RUB, and now the ruble is more expensive.