What is the fair exchange rate for the ruble? A dispute arose at the St. Petersburg forum

At the St. Petersburg International Economic Forum (SPIEF), a dispute about fairness arose between the "powers that be." However, it was not about politics or social issues, but about the ruble exchange rate. The head of the largest state bank, German Gref, said that the ruble exchange rate is currently undervalued, and its equilibrium value is at the level of 100 rubles and higher per dollar. To this, the director of the monetary policy department of the Central Bank of the Russian Federation, Andrei Gangan, responded that the equilibrium rate of the domestic currency is the one we see now. MK, together with experts, sorted out who is right in this controversy.

The third day of the SPIEF was marked by a discussion about the fair exchange rate of the ruble within the representatives of the financial block. During a business breakfast with representatives of the government and business elite, German Gref stated that the current exchange rate of the ruble to the dollar does not reflect the real economic situation and is at an inflated level. "Today it is obvious that the equilibrium exchange rate of the ruble is the rate of "100 plus" in relation to the dollar," he explained. "Today we have an exchange rate of 78-79 rubles per dollar. This is felt very strongly by all our export industries, and first of all the budget." He added that the current situation creates a significant burden on the revenue side of the state treasury, which is already facing a deficit.

Literally a few hours later, a representative of the regulator, the Central Bank of the Russian Federation, gave an answer in absentia on the sidelines of the SPIEF. "The equilibrium exchange rate of the ruble is not my or anyone else's opinion, it is the result of the balance of supply and demand on the currency market," said Andrey Gangan. "The rate that we see now is the equilibrium rate: it reflects the objective situation in the economy, even if it does not agree with expert opinions and wishes." The director of the monetary policy department of the Central Bank of the Russian Federation added that the high key rate today restrains "overheating of demand" and makes the ruble attractive. It helps strengthen the ruble and suppress inflation. He explained that a weak ruble is indeed beneficial to domestic exporting companies, since it allows them to maintain profits when external conditions worsen. However, this does not mean that such a ruble exchange rate is optimal for the Russian economy as a whole. "The rate will be one that is consistent with low inflation, since everyone benefits from low inflation, both citizens and businesses," Gangan concluded.

However, experts do not consider the discussion around the ruble to be over and expressed their thoughts on a fair exchange rate to MK.

Natalia Milchakova, leading analyst at Freedom Finance Global:

"In our opinion, the representative of the Central Bank of the Russian Federation voiced the most objective opinion. He spoke about the equilibrium exchange rate of the ruble, that is, about the rate that is formed on the currency market depending on supply and demand. The ruble exchange rate in Russia is floating, the Central Bank of the Russian Federation does not conduct currency interventions, therefore, what the ruble exchange rate should be today can only be decided by the market.

When someone claims that the ruble is overvalued or undervalued, that its rate today is not what it should be, but should be different, most often, no objective arguments are given as to why, for example, the dollar should cost exactly 100 rubles, and not 101 or, say, 99 rubles. Depending on oil prices, inflation, the decision of the Central Bank of the Russian Federation on the key rate, or something else? Therefore, such statements can be considered exclusively as someone's personal point of view, given that there are others. The term "fair value" just assumes that this is a market value, which is influenced only by the forces of supply and demand, and no other subjective factors. However, the concept of "fair value" of any financial assets is increasingly remaining in economic theory and has less and less relevance to practice, especially since the publication of Nassim Taleb's book "The Black Swan. Under the Sign of Unpredictability". Black swans are non-market factors, often political, that can change the "fair value" of any financial asset very dramatically.

It is very difficult to talk about what exchange rate of the ruble is "fair" today, since each economic entity understands the "fairness" of the ruble exchange rate in its own way. An overly expensive ruble is unprofitable for Russian exporters, so for them the cheaper the ruble, the "fairer". However, the population and businesses working for the domestic market will have a completely different idea of ​​the "fair" exchange rate: today's strong ruble suits them quite well. By the end of June, we expect the dollar exchange rate to be within 78-81 rubles, the euro - in the corridor of 89-92 rubles, the yuan - within the range of 10.8-11.3 rubles."

Natalia Pyryeva, leading analyst at Tsifra Broker:

"Since the end of 2024, we have been forecasting a strengthening of the ruble in the first half of 2025 and its subsequent weakening, starting in the second half of the year. A stable and predictable ruble exchange rate is important for the economy, and given the high share of Russia's export revenues, a weaker exchange rate than the current one is beneficial.

According to our estimates, there is no reason to expect artificial measures aimed at weakening the ruble. The national currency rate will return to 90-100 rubles per dollar due to economic reasons without outside help, while today a stronger rate allows for cooling inflation, which is the most important task of the Bank of Russia.

Today, the ruble is largely supported by high rates – exporters are selling currency and accumulating free ruble liquidity on deposits to receive additional interest income. At the same time, cooling consumer demand due to increased savings sentiment and expectations of an improved geopolitical situation are reducing importers' demand for currency. Thus, a surplus of foreign currency supply is formed on the market.

Reaching the ruble exchange rate of "100 plus" per US dollar will not be critical for the economy if it moves in this direction in a planned and predictable manner. We believe that by the end of the year the ruble may indeed approach the 100 ruble per US dollar mark. And in July, factors will remain in favor of stabilization at the current levels of 77-81 rubles per dollar with the potential to weaken to over 85 rubles per unit of the American currency closer to autumn."

Vasily Girya, General Director of GIS Mining:

"Statements about an "equilibrium" rate in the range of 100 rubles per dollar are very indicative. They reflect the concerns of export-oriented industries - a strong ruble does reduce ruble revenues and tax revenues from the raw materials sectors. But artificial, "manual" weakening of the ruble through currency interventions, for example, can increase inflationary pressure. This is especially dangerous against the backdrop of risks in the food and logistics markets. Therefore, the approach of the Bank of Russia - to maintain the market rate and intervene only in case of sharp fluctuations - seems justified. By the way, at the SPIEF this year, there was a lot of talk about the risks of the ruble. This means that businesses feel the difficulties and openly state them.

Currently, the ruble exchange rate is based on the state of the trade balance, the decline in imports, the activity of exporters during the period of tax payments and on expectations for the key rate. The sanctions factor plays a role in the long-term structure of currency supply and demand rather than in daily dynamics. It should be understood that with such a stable supply of currency and fairly weak imports, the dollar will probably remain within the range of 78–82 rubles.

It may move towards 100 rubles with a systemic external shock, such as a new round of sanctions or a drop in oil prices. Without a stimulus of this scale, such levels are unlikely to be sustainable. Until the end of 2025, the baseline scenario assumes that the dollar exchange rate will remain in the range of 82–90 rubles with a moderate weakening of the ruble and the key rate remaining relatively high.

The current strengthening of the ruble does reduce exporters' income in ruble terms. This is felt most by metallurgists and the agro-industrial sector, where the marginality is not so high. In oil and gas, the effect is smoothed out by dividend payments and tax adjustments. Overall, the trend is painful for the budget."