Page 87 - RusRPTSept23

and government switch from using the dollar as the favoured currency to the yuan.
Real effective exchange rate of ruble down 7.7% in July. In July 2023, the real effective ruble rate declined by 7.8% in monthly terms against the dollar and by 27.5% year-to-date
Oreshkin slams the CBR for being asleep at the wheel. Twenty minutes before the dollar broke the bar of RUB100 to the dollar on August 14, TASS published an article by presidential aide Maxim Oreshkin, in which he lambasted the CBR and flatly accused it of weakening the ruble on purpose. He stated that the Russian economy needs a strong national currency.
The main reason for the collapse of the ruble and the acceleration of inflation, according to Oreshkin, is too soft monetary policy of the Central Bank (that is, a too rapid reduction in the key rate).
That played a decisive role in accelerating demand in the economy that has lead to overheating, by accelerating lending, writes Oreshkin. RUB9.5 trillion came from the growth of corporate lending, another RUB3.3 trillion from the growth in lending to the population, he calculates.
The budget deficit (RUB1.5 trillion since the beginning of the year) is significantly lower than these figures, Oreshkin notes. On the whole, the public sector provided a negative impact on the money supply (-RUB0.9 trillion as of August 1 of this year).
It is not for nothing that Oreshkin compares the effect of the budget deficit and the low key rate of the Central Bank. These are the two main mechanisms by which, to put it simply, the state "prints money" for the real economy.
“The number of rubles in the economy is growing, and against the backdrop of a decrease in the flow of foreign currency into the country (there are dozens of reasons for this, not even counting oil and gas sanctions - from an increase in the share of the ruble in export settlements to the outflow of money from Russians to foreign banks), this causes the ruble to fall,” The Bell commented in a note.
To put it bluntly, Oreshkin writes: the Central Bank was to blame for the collapse of the ruble, which cut the key rate too quickly, and not the government and the Kremlin, which dispersed budget spending in the first quarter by 35% y/y with falling incomes.
The majority of Russians (68%) prefer to keep their savings in rubles.
This is evidenced by the results of the VTsIOM poll. The study was conducted on July 29 among 1600 Russian citizens over 18 years old.
RUSSIA Country Report September 2023 www.intellinews.com