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  Thursday, February 2, 2023
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Russia's financial policy must be tightened to contain the ruble's appreciation
Russia's financial policy must be tightened to contain the ruble's appreciation, the finance minister said Friday. Alexei Kudrin said in August that the government would use economic measures to hold back the ruble's further rise, and intended to keep the national currency's appreciation within 4.7% of its average effective rate this year. "We are going to toughen the financial policy to reduce the ruble's appreciation rate," Alexei Kudrin told a finance conference in China. The minister said the government was worried by the ruble's rise, as the currency exchange rate was expected to appreciate against the dollar by 17.4% in 2008, by 12.9% in 2007 and by at least 6.5% in 2006, compared to the rate on December, 31 1997, when the ruble was redenominated. He said the ruble's real effective rate against foreign currencies has risen 8.1% over the past nine months compared to December 2005, adding that the rate for 2005 was 10.5%. Kudrin said the ruble has completely recovered its rate against the dollar following its collapse in the 1998 default, when it dropped 46% on December 1997. The main problem of the ruble's appreciation is that the trend can boost inflation, and Kudrin said Russia took pains to reduce inflation to 10.9% in 2005. But he said its rate is still high. The government adjusted its 2006 inflation target earlier this year from 8.5% to 9%. "The level of economy monetization is only 21%, which means a low demand for money, and insufficient investment activity," the minister said.
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