ALEXEI VEDEV NAMED REASONS FOR THE RUBLE EXCHANGE RATE WEAKENING

Alexei Vedev estimates that a corridor of 2-4% is an acceptable inflation rate for the Russian economy. On the one hand, inflation does not hinder economic growth, on the other hand, too low inflation is more dangerous for economic development.

"Now inflation has accelerated and there is a threat to reach double-digit inflation. One of the key reasons is the unfavorable exchange rate, and the fact that this is an issue for our economy became clear back in March-April this year," the expert said.

Alexei Vedev is firmly against inflation targeting, which the Central Bank adheres to, because it is possible to curb inflation with interest rates if our balance of payments and the entire economy is flooded with petrodollars. "If that is not the case, then real issues arise. And indeed, devaluation has a very strong inflationary effect, just like diesel and automobile fuel. While diesel and automobile fuel, as a driver of inflation, has been dealt with by completely non-market methods, the exchange rate has not been dealt with by these measures. And, indeed, in many costs in the price of end-use goods, the exchange rate takes a big weight and this is a big issue," the expert noted.

According to Alexei Vedev, there are several reasons for an unstable ruble exchange rate. "First, it is the structure of the balance of payments. Formally, we count it in dollars, but it is not in dollars at all. Again, the exchange rate, we look at the ruble's exchange rate to the dollar and the euro, but we have completely different operations. Secondly, we have a rather "crooked market". In fact, supply and demand are combined in such a strange market where many banks have frozen correspondent accounts in dollars and euros and what we see on the market does not quite reflect reality. And the third reason is that our economy is open and industrial assemblies are trying to recover, with imports growing faster than exports. These factors cause certain distortions," the economist believes.

According to Alexei Vedev, not only a blind increase in the interest rate, but also a regulatory impact from both the mega-regulator and the Ministry of Finance is extremely necessary as an effective measure. We need prompt, maybe even not very market-oriented methods, but short-term methods to stabilize the exchange rate and move it to another corridor, to a more acceptable one - this is Rb82-87 per USD.