FX.co ★ Russian Premier believes in advantages of weak ruble

Delivering a speech at the APEC summit, Russian Prime Minister Dmitry Medvedev pointed out advantages of a drop in the Russian national currency. However, only foreign investors and Russian exporters of natural resources will be able to appreciate these benefits which will come unnoticed by ordinary citizens. According to the head of the government, it was the ruble’s devaluation that made the Russian assets attractive for foreigners. Russian securities now are much cheaper than they used to be a couple of years ago. A strange situation has developed. On the one hand, Russia’s foreign partners impose economic sanctions and follow the policy of international isolation in regard to Russia; while on the other hand, the Russian Federation provides them with unique business opportunities. The weak ruble also encourages the management of the largest energy companies, which production is shipped abroad. Payments are carried out in a foreign currency, but salaries are paid in rubles. So with the difference between the exchange rates, labor costs are considerably lower. Speaking of economy in general, Medvedev named the western sanctions and cheap crude oil the main negative factors and described the situation as very complicated, but not critical. Russian Federation Minister of Economic Development Alexei Ulyukayev shares this view. He pointed out that the Russian economy reached the bottom of the crisis and is going to stabilize now. Still, not everyone is that optimistic. Herman Gref, CEO and Chairman of the Management Board of Sberbank of Russia, said that severe and prolonged bank crisis is coming. However, the Central Bank of Russia immediately contradicted him saying that the situation is not simple, but it can be dealt with.