Reuters/Moscow


Russia’s central bank head, Elvira Nabiullina, warned about the dangers of capping gains in the rouble and defended the country’s floating exchange rate.
Some Russian officials have spoken of the need to prevent the rouble from strengthening too much in recent weeks in order to keep domestic firms competitive and to rekindle growth.
The rouble collapsed to all-time lows in December following Western sanctions over the Ukraine conflict and a collapse in global oil prices. It rebounded in the first few months of 2015.
“The exchange rate should remain floating,” Nabiullina told lawmakers in the lower house of parliament. “If we fix an upper limit for the strengthening of the exchange rate, that is fraught with negative consequences.”
Russia floated the rouble a year ago but has been accused of continuing to manage the rate by intervening irregularly on the currency market.
Nabiullina reiterated that the central bank did not plan to increase its foreign-currency reserves over the next three years in its baseline scenario but said it could buy foreign currency should oil prices rise according to its optimistic scenario.
She also said monetary policy had a limited influence on stimulating economic growth and that the central bank’s main priority was fighting inflation.
“The decline of the Russian economy is currently predicated on a combination of so-called cyclical and structural factors, and the role of structural factors will gradually increase,” she said.
“Therefore the possibilities for monetary policy to stimulate economic growth are limited.” Russian Finance Minister Anton Siluanov separately told lawmakers yesterday that his ministry expected the Russian economy’s contraction to “bottom out” in the fourth quarter of this year.
Russia’s economy is expected to contract by around 4% in 2015, according to analysts polled by Reuters. Economists remain pessimistic about the prospects for any economic recovery, as the price of oil, Russia’s main export, stays depressed and the global economy is struggling.