Russian economy minister says ruble has deviated from fundamental value, sees firmer by year-end
Published Sep 12, 2018 01:49AM ET
Russian economy minister says ruble has deviated from fundamental value, sees firmer by year-end
By Polina Nikolskaya
VLADIVOSTOK, Russia (Reuters) - Russian Economy Minister Maxim Oreshkin said on Wednesday the ruble has "seriously deviated" from fundamental value but he expected it to firm to 63-64 rubles to the U.S. dollar in December this year.
Earlier this week the ruble touched 70.60 per U.S. dollar
Officials, including some from the finance ministry, have said they had a wide range of tools to be used in case of high market volatility.
So far the tools had not been necessary and there was no need to make exporters sell foreign exchange to support the ruble, officials have said.
"Currently, there is a deviation from the fundamental (exchange rate) level...It can last for a quite prolonged period," Oreshkin said on Wednesday.
The ruble floated freely and was influenced by a number of factors including sanctions and capital outflows, Oreshkin said on the sidelines of the Eastern Economic Forum in the Russian Pacific town of Vladivostok.
The economy ministry this month lowered its 2018 economic growth forecast to 1.8 percent from 1.9 percent and to 1.3 percent from 1.4 percent in 2019 amid mercurial markets, faster capital outflows and pessimism over the possibility of new U.S. sanctions.
"We don't expect any big positive surprises from the third and fourth quarter (in terms of economic growth)," Oreshkin said. "It is due to the increased unpredictability, higher volatility on the financial markets."
Oreshkin said he did not expect economic growth to exceed 1.9 percent in the last two quarters of 2018.
The Russian central bank's board meets on Friday to decide its key interest rate, with analysts expecting the rate to be held steady, with the central bank sending a hawkish signal in its statement to calm down markets.
Oreshkin said on Wednesday that annual inflation this year may exceed his forecast of 3.4 percent if the ruble exchange rate remains at current levels. The central bank's inflation target is 4 percent.
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Written By: Reuters
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