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Myths about devaluation
Material posted: Publication date: 05-09-2015
In recent weeks, the ruble has fallen by more than 20% against the euro and the dollar, having lost only 24 August more than 4 rubles per euro. We all are accustomed to hear that to blame the oil price, which really has updated the record for the length of the fall, kept since 1986. We even are accustomed to the fact that only on oil prices and the ruble exchange rate depends as 146 million people in 17 square kilometers of land millions nothing more is produced, and the country has no more than $ 350 billion of foreign exchange reserves.

Actually, in spite of the fact that a large quantity of people at us make negative cost in economy, the country really except oil still is rich with gas, a palladium and gold, nickel and copper, and many what else riches in the tired out hands of oligarchs have. Gold and exchange currency reserves at us too decent - still about the seventh-eighth on the size in the world, despite their decrease.

Why rouble so it is prompt and so painfully becomes cheaper? And whether it was possible to admit such devaluation? Or such devaluation can is the blessing for the Russian manufacturers and the Russian economy?

Rouble falling very painfully for the population whose obligations are expressed in foreign currency (middle class) and for business which anyhow deals with a currency component in costs or a gain (and it is the most part of large and average business). Under the legislation of Russia for stability of a rouble exchange rate the Russian Central bank answers, moreover is is its pivotal problem. For this purpose the Central bank holds reserves in currency - the Central bank bought up this currency when the supply and demand parity on it was opposite, thus without allowing to become stronger strongly to rouble. Redeemed in the theory (and in our concrete case redeemed by the Central Bank in practice) the currency in the subsequent carries out balancing function - for the account of its sale is provided stability a course when the supply and demand parity on national currency for any reasons changes. That is in the theory at the moment "debt" to the market should be returned Central bank - on this currency roubles should be redeemed. As all see in practice for any reason of it does not occur.

Can at our Central bank, despite corpulent decade of the highest prices for oil, there is not enough gold and exchange currency reserves? It not so, more than is enough reserves. All monetary base of Russia in wide definition (that is all spare cash of the country) according to the Central Bank makes 9,8 trillion roubles. That is it is rough all money on which even in the theory (!!!) In the country it is possible to buy currency. It is simple to consider that at the today's size of reserves at a Central Bank current rate will redeem all rouble cache of the country Russia for hardly more than 1⁄3 from available at it at the disposal of reserves. To me will object that all reserves to spend for it it is impossible, a part of reserves in long-term assets and gold, and the part belongs to the Government. All so. But also free reserves of the Central Bank at a rate of 150-200 billion will suffice what to redeem all monetary base at the rate about 50 roubles for dollar. It also is in a today's situation a dollar market rate.

Thus it is necessary to notice that the size of monetary base in roubles the Central Bank - for example operates, it can lift specifications of funds of obligatory reservation of banks or reduce the sizes repo with banks. The size of monetary base can easily reduce Central bank, thus having spent much less reserves for its repayment. Thus, the Central bank does not carry out the legislative duty not because of shortage of currency reserves, and for any other reasons. Obviously (and it has been earlier sounded publicly by the first person of the country) that to Central bank a task in view gold and exchange currency reserves not to reduce, and to hold them "at any cost" - the price which many citizens today have wholly felt, the companies and country banks.

What can pursue the given decision in what the purposes and what its real consequences for miracles do not happen and in this life it is necessary to pay for all?!

Myth 1. Main - Importozameshchenie

We have "pleasure" the ninth month to observe falling of economy and the main thing of industrial production to which rouble devaluation has not helped and any more will not help. It is possible to name this somehow - Russia «has laid down for a long time under the West» or Russia «was perfectly integrated into world economy» - a taste question, but sense that in structure of the cost price of the enterprises of Russia the currency component is so high what to get for the devaluation account competitive advantages at the price it is not possible. More precisely - in most cases it is not possible (clearly that separate benefitsiary at such course is)

Myth 2. Populist - We receive roubles for our oil more.

It is truth. But the one who tells it possibly forgets that roubles are printed by ourselves and theoretically we can receive for our oil (both gas and all the rest) some roubles, a question that we do with them further.

Myth 3. The most painful - Fight against inflation.

It would be the most ridiculous myth if its grief was not felt on the skin by each Russian. The Central Bank under the law is responsible for stability of rouble. Neither it is a lot of nor few Constitution of Russia in 75 article says «Protection and maintenance of stability of rouble - the basic function of Central bank of the Russian Federation which it carries out irrespective of other public authorities» but as in the established retrenchment policy of reserves make it basically cannot, tries to give reason that stability of the prices in roubles means. That is type rouble devalviruetsja concerning foreign currencies, but after all the rate of inflation not so is high and besides decreases, so the law requirement is executed - the rouble is steady in the prices. Everyone who goes to shop knows, how much officially presented to heads of the country of the statistican is far from their real own sensation of a rise in prices.

Myth 4. Otmazochnyj - struggle against speculators.

The Central Bank lifts and lowers a course to discourage speculators to buy currency. Unpredictability of the Central Bank does not allow to them to earn. Probably it and so. But if one (units) cannot earn, the others constantly lose all. Not all at once run to buy currency but if it stably grows every day weeks the most patient do not maintain also. At everyone, it is assured, there was such experience - hope that just about the trend will be developed and at last «sit-not sit, and currency it is necessary to buy» patience the person bursts also goes to buy currency. In life a great bulk and the poorest just buy on hajah when skilled speculators already sell. Unfortunately, in fools there is the one who is less formed, that is the simple people.

Myth 5. Difficult - Investment appeal.

Really potentially the cost price of the future goods can be more low and it theoretically creates preconditions for investments into manufacture competitive at the price of the goods and services. It is necessary, but insufficiently. «The investment climate», and better to say - presence of working public institutes, absence of corruption, the transparent and predicted policy Is required notorious. And with it a problem. And devaluation here both helps, and disturbs. A currency and import component are high, and terms of return of investments always long - what rouble exchange rate can be predicted on 5, and 10 years are better? Any, it does not give in to any reasonable estimation and forecasting. Hand-written game rules are not executed, instead of hand-written - are not disclosed.

Myth 6. The most erroneous - filling of budget revenues.

All have learnt to divide the cost of oil put in the Russian budget on its exchange cost and to receive a rouble exchange rate to US dollar. All have got used already and have reconciled that where oil, there and rouble. In spite of the fact that incomes of oil sector it almost 50 % of the budget, it nevertheless is a little offensive in relation to other economy. But emotions do not discredit myths. Yes, such method reaches formal filling of the budget and execution of formal nominal obligations of the state. Primitively and illustratively speaking, rouble devalvirujut that in time and in full to pay salaries. Also carry out of these obligations. But what real purchasing power these roubles possess?! As a matter of fact, execution of social and other obligations of the Russian budget occurs for the account of decrease in purchasing capacity of the Russian rouble and the population of Russia, an impoverishment of simple people. Differently, devaluation it simply hidden tax on all citizens to whom have paid due roubles but on which it is possible to buy in a reality almost in 2 times less …

So why the Central bank does not spend reserves for course maintenance?

Can be to us does not suffice on the import goods or we are afraid, what we will have nothing to pay for the foodstuffs? In any way is not present - our balance of payments remains positive, despite outflow of the capital from the country in approximately 100 billion dollars a year. That is all of us still receive more for the raw materials sold abroad, than we pay for products got from abroad and the goods - suffices and on mad outflow of the capital and even still remains. Yes, in many respects because Russians began to buy less than the import goods (and in general to buy less), but nevertheless the country has positive trading balance. And free movement of the capital for which for some reason so the Government and the Central Bank, this pleasure for 2-3 % of the most provided long keeps, and pays for it through devaluation all population. Anyway, the currency for import financing is not necessary to us - us suffices and possibly current incomes and the future export earnings will suffice. The external debt of the state is lowest, and eurobonds of the Russian companies and banks in the majority are already redeemed by the Russian banks though the state is formal on them does not answer and take in the account should not.

However, we continue to consider gold and exchange currency reserves as an inviolable cow. It is possible to assume that we expect deterioration of geopolitical conditions and we are afraid that as a result of political and economic isolation of Russia more nobody will lend also we cannot cover the deficit of the budget. But ourselves can give to ourselves! Who prevents to print to Central bank a quantity of roubles and prokreditovat the budget? Yes, yes, to me now will start to say that from it there will be at once an inflation. But, first, it only monetaristskaja the theory already almost as 25 years ago delivered on our soil, secondly today's conditions essentially differ from times hyperinflations 90 when such theories and forecasts were applicable, in the third if there will be an inflation in general precisely not at once, not so strong, and excessive monetary weight today's Central Bank to sterilise there is no problem - all tools in hands. Well and the main thing - as a result of devaluation the same rise in prices, only it is more inevitable, sharper and more painful!

Myth 7 - Pernicious.

We also can assume that as a result of a certain isolation external resources - on war or defence who knows be required to us. But someone can knows that there will come such day when it is necessary to unpack a sacred jug. Therefore if tomorrow war - at us is 350 billion. Only dollars and euro. And if "izoljatsionnyj" or "military man" scenarios to consider seriously it is necessary to understand accurately that all dollar or evrovye actives come to an end as a result korrschetom in American either European Bank, or the obligation emitted with one of these countries. But if tomorrow we are waited by the scale conflict from potential sanctions these means will not rescue even Chinese depozitary - all as pretty execute decisions of the countries of emitters of corresponding currencies for are not ready to risk a stop of the foreign trade with the largest trading partners (the USA and EU). How many on the world lies the frozen Iranian cache!

Where the Iranian money in attempts to break on the international markets only did not fight. Illusion to consider that gold and exchange currency reserves in case of the rigid scenario of succession of events somehow can be useful to us. In that case or there will be legitimate mechanisms or if will not be it is not necessary to feed illusions - these means will freeze and-or will withdraw in our ways - on a lawlessness.

It is necessary to draw a conclusion that objects in view for the sake of which such price gold and exchange currency reserves remain, in the majority are illusory, and many are frankly unattainable. But that the most dangerous - round this vital, extremely critical component for the Russian economy is not conducted absolutely any discussion. Does not express the alternative points of view, consequences are not analyzed. All have merged in compromise ecstasy of following of a rouble exchange rate behind cost of oil and absolutely ignored interests of all other economy, and the main thing of 146 million inhabitants of the country ….

Unfortunately, our course policy not only is not stable, but also the most important - is opaque. Has put at all that opacity of a policy on milliard volumes leaves an enormous field for abusings. I am absolutely far from thought that someone does it specially for the sake of the mercenary purposes (though as the practising banker I can confidently assert what to supervise in such volatilnosti, and unpredictability of dealers and their left operations perfect it is impossible for opacity). More important another - neither the population, nor other active economic subjects have no possibility to plan the finance not only in long-term, but also even in short-term prospect! It creates the enormous system risk acting as heavy burden for all managing subjects of the country.

The paradox, but instability of a course becomes actually unique stable business factor in Russia. Only it is not clear for the sake of what.

Grigory Guselnikov

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