Exchange rate of the dollar (and the euro) has been stable only because of the large-scale ruble injections by the Central Bank
Russia is fed up with petrodollars. Take a look at the price tags in the stores if you doubt the statement because there is no greenbacks in your pocket now just like before. The rising consumer prices clearly indicate that consumer-price inflation will be higher than the government's 10 percent estimate for this year.
The reasons behind the above developments include oil exports at a very high price. The buyer pays in U.S. dollars for crude, the dollars are sold for the rubles to the Russian Central Bank. The rubles are spent on the domestic market. More rubles circulating through the market means the higher rate of inflation and consumer prices. First deputy chairman of the Central Bank, Alexey Ulukayev, even said that the Central Bank was ready to stop operating at the foreign exchange market and cease currency exchange regulation with regard to the ruble. He also said that the mandatory sale of currency revenues by exporters to the Central Bank would be canceled soon.
Canceling the mandatory sale of currency revenues is a propaganda stunt. These days exporters must sell 10 percent of the currency. In actuality, they sell up to 60-70 percent because of the need in the rubles. In other words, nothing is going to change should the authorities cancel the mandatory sale. Exporters will keep selling the currency just like they do today.
It would be a significant move if the Central Bank really stopped operating at the foreign exchange market. So far the exchange rate of the dollar (and the euro too) has been stable only because of the large-scale ruble injections by the Central Bank. The foreign currency exchange rate will immediately go gown once the injections dry out. On the other hand, the ruble exchange rate will increase. Experts believe that the dollar may drop to 15 rubles within the forthcoming two years.
Those who have their savings in foreign currency had better start thinking about using some other way of saving up. It is worthwhile to change the savings into rubles or securities. The majority of the population that is paid in rubles can only benefit from the decrease in foreign currency exchange.
Some people say that Russian-made goods will not be able to match foreign competitors' goods and therefore the imports will dominate the market. This may seem quite ridiculous. Domestic goods will always have the advantage over foreign-made products due to customs duties. Meanwhile, domestic market will finally get a stimulus to its development. It is about time the economy should do something else aside from pumping crude and gas. Technical modernization of industrial facilities will be easier to carry out since the price of imported equipment will go down.