Page 35 - Russia OUTLOOK 2024

The Economic Development Ministry expects that the average dollar exchange rate in 2024 will be RUB90.1, in 2025, RUB91.1 and in 2026, RUB92.3, Minister Maxim Reshetnikov said on October 16 during a session of the budget and tax committee of the parliament’s lower chamber State Duma.
“Taking into account the trade surplus growth this year and taking into account the approved measures, we expect a further stabilisation of the ruble’s rate in 2024-2026. Given the changes in the structure of payments and capital outflow, we see balance at around RUB90-92 per US dollar,” he said, as cited by Prime.
Currency controls & yuanisation
Before the invasion, Russia held $634bn in international reserves, part of what has been described as “Fortress Russia”. KSE estimates that around $292bn are currently immobilised due to international sanctions on CBR and NWF. This leaves Russia with access to $152bn in monetary gold and roughly $121bn in FX assets (largely yuan).
But Russian banks and corporates were able to acquire $175bn in assets abroad, due to the opaque trade flows and shadow fleet oil exports where the profits accumulate in offshore bank accounts in what is a slush fund that the Kremlin has access to.
Shortly after the invasion of Ukraine, the CBR imposed very constrictive currency controls, but once the immediate crisis was over it began the process of rolling them back again. However, after her unorthodox experiment, where Nabiullina went slow on policy hikes to allow the ruble to devalue and so help create more rubles for budget spending, she nearly lost control of the situation in August 2023 after the ruble hit RUB100 to the dollar.
As access to dollars remains crucial for the Kremlin, it has been toying with the idea of reimposing some currency controls to better manage its stock of foreign exchange, which is increasingly held in Chinese yuan.
The Russian government plans to institutionalise and codify currency controls, potentially introducing a systemic currency control procedure for trade settlements, Kommersant daily reports citing the address of Prime Minister Mikhail Mishustin at the international export forum "Made in Russia-2023".
The Russian Finance Ministry resumed FX sell operations in the domestic FX market under the new fiscal rule mechanism on January 13, 2023. Purchase and sales transactions of foreign currency are carried out by the Bank of Russia on the domestic market in the currency section of Moscow Exchange in the ‘Chinese yuan-ruble’ instrument.
The share of Russian ruble and Chinese yuan settlements in Russia’s total foreign trade has surged to almost 70% as Moscow rapidly shifts away from
35 Russia OUTLOOK 2024 www.intellinews.com