An Estimation of Fundamentally Substantiated Real Exchange Rate of the Ruble

Russian Economic Developments, No. 2, pp. 65-67, 2015

3 Pages Posted: 26 Feb 2015

See all articles by Alexandra Bozhechkova

Alexandra Bozhechkova

Gaidar Institute for Economic Policy; Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research

Pavel Trunin

Gaidar Institute for Economic Policy

Date Written: February 24, 2015

Abstract

The key factor in the strengthening of the real exchange rate of the ruble in the 2000s was the transformation based growth of Russia’s economy (the Balassa-Samuelson effect) coupled with the improving foreign trade conditions. As can be concluded on the basis of data for Q4 2014, for the ruble’s real exchange rate to return to its fundamentally substantiated level, it was to be increased by 6.2%. In view of expectations of inflation in the RF and her trade partners at the rates of 12-14% and 3-4% respectively, the real effective exchange rate of the ruble in 8-11 months will return to its equilibrium level, if the nominal rate remains stable and the fundamental factors do not deteriorate.

Keywords: Russian economy, inflation, monetary policy

JEL Classification: P24, E52

Suggested Citation

Bozhechkova, Alexandra and Trunin, Pavel, An Estimation of Fundamentally Substantiated Real Exchange Rate of the Ruble (February 24, 2015). Russian Economic Developments, No. 2, pp. 65-67, 2015, Available at SSRN: https://ssrn.com/abstract=2569371

Alexandra Bozhechkova (Contact Author)

Gaidar Institute for Economic Policy ( email )

Gazetny pereylok 3-5
Moscow, 125993
Russia

Russian Presidential Academy of National Economy and Public Administration (RANEPA) - Institute of Applied Economic Research ( email )

Russia

Pavel Trunin

Gaidar Institute for Economic Policy ( email )

Gazetny pereulok, 3-5
Moscow, 125993
Russia

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