Russian ruble news: Zadornov told how to return the dollar to 85 rubles

The ex-head of the Russian Federation's Ministry of Finance proposed measures to bolster the ruble.

It is anticipated by Bank Saint Petersburg that the ruble will depreciate to 97 per US dollar in the foreseeable future.

Bloomberg has predicted that the ruble may increase in value by 10% against the dollar.

Last week, the ruble experienced a drop in value after a sharp rise the week before, when the authorities had an informal agreement with exporters to increase their sales of foreign exchange earnings.

Mikhail Zadornov, the ex-Minister of Finance and the former head of the Otkritie and VTB 24 banks, shared with RBC several methods that could bring the dollar back to 85 rubles.

Zadornov proposed that fiscal and monetary stimulus be reduced in order to reduce demand for imports and strengthen the ruble. He argued that this could be achieved by tightening fiscal and monetary policy simultaneously, with the Central Bank's rate increase being a step in this direction.

Under current "narrow" market conditions, mandatory repatriation of foreign exchange earnings is necessary. Exporters' need for foreign currency is much lower than their income, so it is not possible to allow non-sale of foreign exchange earnings.

The issue of rupees that have been stuck in India due to stringent foreign exchange regulations in the country must also be addressed, which puts pressure on the ruble.

The government and the Central Bank should impose restrictions on the movement of capital through the capital account. This would control the actual withdrawal of currency, such as dividends and other income of non-residents, and the sale of businesses by foreigners with the withdrawal of currency.

Zadornov believes that if the issues are addressed to some extent and raw material prices remain the same, the ruble should appreciate to around 85 rubles per dollar. He further states that this would not be a temporary increase, but rather a return to a balanced level.

The bank "Saint-Petersburg" believes that if the agreements recently made with exporters do not guarantee a consistent sale of foreign exchange earnings within a month, the dollar exchange rate could potentially increase to 97 rubles / $ in the near future.

It is predicted by Bloomberg that the ruble could increase in value by 10% against the US dollar if the Central Bank maintains the key rate at 12% until the end of the year. Furthermore, the yuan held in the reserves of the Russian government is sufficient to finance expenditures and back the ruble for a further three years.