Russian residents, who long accustomed to all kinds of financial "surprises" from their own government, react very sensitively to all fluctuations of the ruble and to rumors about its possible fate. People fairly believe that any reform might aggravate their financial situation.
No information is usually available in these cases. However, this is understandable. The Russian politicians are not an enemy to themselves. Therefore, they do not share their plans on their own financial well-being and the probable losses of ordinary people. Therefore, surprises of this kind usually occur as suddenly as possible to stun an average citizen and deprive him or her of any possibility of any financial resistance. On this basis, any even the most ridiculous rumors are perceived as a precursor of another cataclysm.
In the last months, there are rumors about the possible ruble denomination in Russia. They are "confirmed" by such "facts" as the messages about the upcoming "crash" of the dollar, fluctuations of the ruble rate and the decision to change the design of some banknotes. As a result, the ruble exchange rate was commented by Press Secretary Dmitry Peskov. According to him, there were no sharp fluctuations in the ruble exchange rate.
"Yes, there might be volatility with an amplitude slightly higher than usual, but no fever," Peskov said.
So, how real are rumors of this kind? Let's start with the last one, related to the design. The most interesting thing is that this very point has nothing to do with the possible denomination. At the same time, it has become the main point in the emergence of rumors about "ruble-denomination." People’s consciousness firmly associated the change in the design of the banknotes with the removal of "extra zeros" from them.
However, according to official statements, this is unlikely. On March 23, the Central Bank announced only a change in the design of banknotes during the years 2022-2025, while at the same time, there will be banknotes of the old type. According to Pavel Shust, the executive director of the Association of participants of electronic money and money transfers, there is nothing extraordinary in this process. The banknotes will have new security degrees. They will be put into circulation, gradually replacing the old-style banknotes, as it happens, for example, when replacing old banknotes.
Perhaps, a statement made last year by Alexander Razuvaev, the head of the Alpari information and analysis centre, was the main point of the conversations about denomination. He considers denomination at this stage necessary. According to Razuvaev, this operation would have a positive effect, because, firstly, it would return the kopecks in use that had been forgotten for a long time. Secondly, it would put money of improved protection and design into circulation. Thirdly, “it would improve the attitude of the Russians to the ruble, because people would psychologically easier to take the dollar for 70 kopecks than for 70 rubles.”
This is where the second factor, a fairly high ruble inflation rate, comes into play, which has raised red flags among people. Despite the fact that the government declares its moderate rate, in fact, everything is not as good as people would like it to be. For example, according to Rosstat, the inflation rate for last year was 4.9%, and it was a little over 3% for 2019.
At the same time, there are users’ calculations on the Internet. They are based on a comparison of store receipts from different years. For example, today, a set of products, which cost 3,000 rubles ($40.44) in 2007, costs 13,500 rubles ($181.98.) That is, the increase in price is 350%. In other words, some simple calculations show that as of 2020, inflation, roughly speaking, was about 27% per year, which clearly does not correspond to the official figures.
However, experienced economists still agree with the Central Bank. According to them, denomination is unlikely to occur soon in Russia.
"I allow any, even the most fantastic scenario. Now, everything might be expected from our authorities. Another thing is that denomination is highly unlikely," said Igor Nikolaev, doctor of economic sciences.
As for the "collapse of the dollar," these talks, according to experts, arise from time to time and precisely when the ruble has serious problems. Then reports about this, albeit veiled, begin to appear again. We will not retell the concerns of the economists, who are critical in this respect and little known to general public.
However, Eduard Bugrov, a managing partner at GLS INVEST, recently told Prime News Agency that Russians needed to urgently change the structure of their savings. According to him, 60% of them should be left in the world's major currencies (30% in dollars and euros.) He recommends to keep a total of 40% of them in rubles. In doing so, Bugrov gave a hint to people that the ruble was more stable not to the currency pair EUR/USD, but to both currencies separately.
However, given the fact that over the past year, the ruble exchange rate fell against the dollar by 20% and by 30% against the euro, other experts are not so optimistic. More precisely, there is no unanimity in their opinion on this question. Some of them believe that the exchange rate will remain at the level of 75-76 rubles per dollar by the end of this year. Others, for example, the experts of the Center for Macroeconomic Analysis and Short-Term Forecasting say that by the beginning of 2022, the exchange rate will amount to 95-103 rubles per dollar and it will be possible to strengthen approximately at the level of 87-90 rubles per dollar no earlier than 2023. Chances are this situation might happen against the backdrop of further impoverishment of the Russians. Moreover, it is the further impoverishment of people might be a certain guarantee that the denomination will not happen. The devastation of small and medium-sized businesses during the COVID-19 pandemic, sanctions against Russia and other financial losses of the residents, no matter how cynical it looks, only benefit the state. The country has accumulated a significant safety cushion. However, apparently, the government is not going to use it to help people that suffered from the turmoil of the last year. Not denomination, but further devaluation of the ruble is forthcoming.
For instance, Professor of economics Gennady Alpatov believes that the government itself might cause the process of ruble devaluation for maintaining the economy even at the expense of the quality of life of the Russians. According to him, the low rate of the ruble today is more profitable than ever before, as it will allow the government to survive the global post-pandemic crisis without great losses. Well, in this case, the well-being of the Russians might be once again sacrificed.