ST. PETERSBURG, June 20 (RIA Novosti) – The Russian government’s plans to weaken the ruble in a bid to stimulate faltering economic growth is unlikely to yield results, Central Bank First Deputy Chairman Alexei Ulyukayev said on Thursday.
Finance Minister Anton Siluanov on Monday said the government is looking for measures to stimulate economic growth in Russia, including the ruble’s weakening.
Siluanov said the ministry would start purchasing foreign currency on the market from August to replenish the country’s reserve funds. He said that this is expected to weaken the ruble by 3-7 percent and stimulate Russia’s faltering growth.
The Russian market reacted nervously to this news on Tuesday, with the ruble plunging against the dollar on the Moscow Exchange, passing the psychologically significant level of 32 rubles.
“I don’t believe that a weak ruble will help the Russian economy,” Ulyukayev said on the sidelines of the St. Petersburg International Economic Forum, adding that the economic impact of a weaker ruble would differ sector to sector.
Russia’s Central Bank has maintained a tight monetary policy, keeping its key refinancing rate unchanged at 8.25 percent, and believing that a relatively strong ruble would help fight inflation.
Ulyukayev said the Central Bank was not under government pressure to devalue the ruble. “The Central Bank has real independence, not only on paper but also in reality.”
He also said that Russia’s annual inflation rate may fall to 7 percent by early July, which would allow the Central Bank to lower interest rates, and expressed confidence that it would hit the target of 5-6 percent for 2013 in the fourth quarter of this year.
The Russian government has been struggling for years to cut inflation in order to create a favorable investment climate and lure foreign investment.