Sergey Tsukhlo, Head of Business Surveys Laboratory at the Gaidar Institute, believes that ruble strengthening rather than weakening always contributes to the growth of investments in the Russian industry. The “Kommersant” cites the opinion of the author of the industrial enterprises surveys”.

Researchers of the Gaidar Institute included a question on the desired amendment in the exchange rate of the national currency in an October survey of industrial enterprises. The enterprises expressed their view about amendments in the exchange rate needed to increase domestic and export demand, investments and competitiveness, as well as to reduce costs. As a result, they voted for a strong ruble across all these criteria, except for the growth of export demand.

Note that since the beginning of the year, the demand for the ruble strengthening has grown significantly. komm_05.11.2020.jpg Most of all it is presented in connection with the cost of production (69% of respondents) and investments (65%). Only 7% of producers counting on an increase in demand as an effect of import substitution and willing to invest in this situation need further ruble weakening.

“The growth of investments in Russian industry is always facilitated by strengthening of the exchange rate rather than its weakening,” noted Sergei Tsukhlo.

Similar situation concerns losses. Cheapening of imports will make it possible to reduce the prime cost of 69% of enterprises, while further weakening of the national currency will force 5% of companies to abandon imports increasing in price. Companies are in favor of ruble strengthening aimed at growth of domestic demand.

“Hardly anyone can refuse imported products in Russia, even consistent supporters of import substitution. If a product becomes more expensive, there is a desire to buy it as soon as possible and for future use.

This stimulates demand for imports instead of demanding the domestic products,” explained the author of the study, Sergei Tsukhlo.

Growth of domestic demand for Russian products is associated with the ruble strengthening by 53% of enterprises, while only 10% say the opposite. The same applies to competitiveness: only 19% of enterprises agree to compete exclusively at the expense of prices in modern environment.