The Fall of The Ruble - The Beginning of a Long–term Trend - Economist Chukin

The National Bank's headache has been the ruble In the last few years. Everything has now changed according to Kazakh economist Almas Chukin.

The expert explains that the KZT-USD exchange rate is the main currency pair for Kazakhstan, as the lion's share of foreign trade revenue comes in American currency. However, the ratio with the ruble always causes an acute reaction, since the Russian Federation as a separate country is the main source of imports, especially consumer goods.

Since the outbreak of the war in Ukraine and the adoption of radical measures to restrict the free circulation of the dollar in the Russian Federation, the ruble appreciated against the US currency and against the KZT. It rose above eight from the usual exchange rate between five and six KZT per ruble. As a result, for Kazakhstan, imports from the Russian Federation have risen in price by 10%.

"However, judging by the latest data, this story has come to an end and the ruble began to slide down to the area of 70-90 rubles per dollar. Consequently, the cross-rate reaches the level of 5.2-6.3 tenge per ruble. The reasons for the fall of the ruble, which I predicted at the beginning of autumn, are different,"

Almas Chukin

Almas Chukin also highlighted the following trends:

• The Ministry of Finance of the Russian Federation is experiencing enormous difficulties with the budget because the "strong" ruble generates less revenue.

• Exporters are experiencing difficulties in selling their goods to markets closed by sanctions, and their revenue is falling, respectively, and foreign exchange receipts into the country are decreasing.

• Foreign enterprises in the Russian Federation cease their activities and exports

• Businesses and citizens are withdrawing currency from the country

• Foreign investments have sharply decreased and the inflow of investment dollars has decreased

• Sharply increased military spending requires expensive imports of components from other countries

• Key export goods – oil and gas - have come under regulatory blockages in the form of sanctions and a ceiling on the purchase price of Russian oil was recently introduced.

"Thus, the fall of the ruble by more than 15% over the past few days is not a market fluctuation, but the beginning of a new long–term trend. The real collapse of the Russian economy has begun,"

Almas Chukin

However, according to external signs, the situation may still look manageable for a while. As the economist lists, quantitatively the economy of the Russian Federation is capable of producing and developing for a long time, but qualitatively the process of degradation occurs every day. It's about artificial isolation from advanced technologies.

"The drop in GDP by 3-4%, which is expected by the end of the year, looks like a knockdown, but not a knockout. But this impression is deceptive. GDP can be made from different things (...). However, a military economy generates inefficient consumption and consumption of the country's resources and budget. Already, defense spending has been increased to more than a third of the budget of the Russian Federation,"

Almas Chukin

The great pivot to the East did not take place based on the current circumstances. There has only been an influx of Chinese imports, the economist concluded.

Source: author's Facebook page

Original Author: Alexander Smolin