“Overstrengthened” Russian Ruble Strains Russia and Belarus Economies
The “overstrengthened” Russian ruble is hitting the economies of Russia and Belarus, reducing export revenues and creating risks for the stability of national currencies.
The Gaze reports on it, referring to the Foreign Intelligence Service of Ukraine.
The Russian ruble exchange rate exceeds the economically justified level, which is already negatively affecting the Russian Federation's state budget.
As explained, the overly expensive ruble reduces oil export revenues, and the budget deficit at the end of the first half of the year significantly exceeded annual plans, forcing the Russian Ministry of Finance to prepare for spending cuts amid falling oil prices.
Sberbank experts consider the ruble to be overvalued and predict that by the end of the year, its exchange rate will be 85–90 rubles per dollar, whereas a few months ago the equilibrium rate was considered to be around 100 rubles per dollar.
For Belarus, the situation creates additional challenges. A potential rise in the dollar to 3.4–3.5 Belarusian rubles could put pressure on the national currency and the country's exporters.
The National Bank of Belarus is already taking measures to convert currency into hard currency and increase gold and foreign exchange reserves to a record $12.4 billion in order to temporarily curb the devaluation of its own currency in case of problems with the Russian ruble.
However, it will be difficult to maintain the stability of the Belarusian currency in the long term, as the high exchange rate of the Russian ruble has a negative impact on the Russian economy and the state budget, while posing a risk to Belarusian exports and currency stability.
"Both Russia and Belarus find themselves in a currency trap. The strong ruble is hurting the Russian budget, and it is risky for Belarus to maintain the exchange rate of its own currency for a long time," the report concludes.
As The Gaze reported earlier, Sberbank CEO German Gref, one of the most powerful bankers in Russia, warned that Russia's economy is stagnating and that if the Central Bank does not lower interest rates, the country will face a recession.