Nabiullina refused to comment on the status of “destroyer of the year”

It has been two years since the start of the Central Bank of (country), and the head of the institution has just given their first major interview.

It would have been beneficial to raise the Central Bank rate sooner.

If the Brent price reaches between $88 and $90, the Bank of Russia may begin purchasing foreign currency.

The exchange rate of the ruble should not be determined by the sale of foreign currency proceeds, and such sales should be of a temporary nature.

Sharp jumps in rates should not be a result of the suspension of foreign currency trading on the Moscow Exchange.

In an interview with RBC, Elvira Nabiullina, the head of the Bank of Russia, stated that although the Central Bank was able to respond to many challenges, there are still unresolved issues in the financial sector. She noted that Russia's disconnection from SWIFT was a difficult experience, and the problem of freezing assets of Russian investors and Central Bank reserves abroad remains.

She believes that the rate should have been increased earlier, such as in the spring. Now, the rate of inflation is quite high; inflationary pressure started to increase in the latter half of the year.

The head of the Central Bank commented that, due to high inflation, some type of product was bound to experience a "shoot up" in prices, which is what happened in 2021. This was caused by a high demand that exceeded the available supply.

If the price of oil per barrel of Brent is between $88 and $90, the Bank of Russia may become a purchaser of foreign currency in January, according to Nabiullina. Otherwise, the Central Bank will be selling currency on the market.

The head of the Central Bank believes that the measure of repatriation of foreign currency earnings should be temporary.

She explained that companies eventually figure out how to get around the limitations that are put in place. Furthermore, these regulations make international transactions more difficult, especially when it comes to paying for imports, such as machinery and other goods.

The ruble exchange rate is not determined by the sale of foreign currency earnings. Rather, it is influenced by the state of the balance of payments, exports, and the demand for rubles to purchase imports.

The head of the Central Bank noted that monetary policy now has an effect on stabilizing the exchange rate, which was partly caused by the high demand for rubles to purchase imports, as well as the rapid growth of ruble loans.

The volume of the foreign exchange market in the Russian Federation that is conducted over-the-counter already surpasses the volume of the exchange market. Thus, if Western sanctions were to be tightened, the halting of foreign currency trading on the Moscow Exchange should not cause drastic fluctuations in exchange rates.

The head of the Central Bank reported that the amount of Russian investments in securities on the St. Petersburg Stock Exchange had decreased to $3 billion by November, compared to the $7 billion recorded in February 2022. Additionally, 80% of the holders of foreign securities are now qualified investors.

Politico magazine assigned Nabiullina the title of "Destroyer of the Year" in European politics, referring to her as "Putin's banker" and acknowledging that she had "managed to prevent the consequences of unprecedented Western sanctions" against Russia. However, Nabiullina did not comment on the status.