The predicting of exchange rates is something that is almost impossible to do and if we could everyone would be millionaires and therefore claims by Russia’s Finance Minister Anton Siluanov that the currency has suddenly become a “strong currency” seem a little farfetched. OK, the currency has had the fastest growth of all currencies in 2015 but it was starting from a very low point after the disastrous last quarter of 2014.
Another issue that may mean that the ruble will be slow to make a full recovery is the fact that Russia is an export driven economy, specifically oil and gas. This means that it is not in the country’s interest to have a strong ruble. The fact that some parties want a stronger currency appears to be largely ignored other than the claims that the ruble is a “strong currency”.
A common misconception is that the ruble will remain weak while ever the price of oil remains low. This can be proved to false when you look at the price of oil. This has remained low but the ruble has gained in strength. This disproves the notion that oil is the biggest single determining factor although it is hard to argue that the Russian economy is not heavily dependent on oil.
Sadly, as with a lot of things that often come from officials in Russia, a lot of the information needs to be taken with a pinch of salt. The Minister of Economic Development, Aleksei Ulyukayev recently claimed that the ruble had returned to its “fundamental level” suggesting that the fall had been purely down to speculators selling the currency. It is certainly a fact that speculators did have some impact but it seem a complete fallacy that this should be the only factor.
So back to the original question, will the ruble recover? Well it has done already, maybe not to the levels we saw in mid 2014 but there has certainly been a significant recovery. At the lowest the ruble fell to 33 units against the dollar from 68 but has now returned to around the 54 mark. This recovery should give some relief to many of the developers around Pattaya who had been significantly hit by the lack of Russian visitors. Will we see 68 again? The chances are that this will not happen in the near future as maybe the currency has stabilized but this stability is certainly no bad thing.
Let’s all hope that the stability breeds confidence again within the Russian market again here in Pattaya. Everyone has felt the effect one way or another and their money is certainly needed to bolster the local economy. It obviously takes time for this confidence to return but things are certainly looking up.