Russia's Central Bank is considering making the sale of foreign exchange proceeds by exporters more flexible, Governor Elvira Nabiullina said on Monday.
She said Russia's economy was entering a difficult period of structural changes related to international sanctions against Moscow over Ukraine.
The Russian central bank earlier in April cut its key interest rate to 17% from 20%, flagging a challenging economic environment and a slowdown in inflation.
Nabiullina is credited with being Russia President Vladimir Putin's mastermind behind the strengthening of the ruble, in spite of widespread economic and trade sanctions by the West.
In "Moscow's Central Banker Dismantles What She Built," The Wall Street Journal explains how Nabiullina has done an about-face on integrating Russia into the West, avoiding inflation and turning the ruble in 2014 into a free-floating currency, in order to preserve Russia's economy during its war on Ukraine.
By dialing Russia's interest rate down to 17%, the governor signalled that Russians and other savers were no longer making a run on the bank. Nabiullina is also the main reason Putin has demanded European nations pay for Russian oil and gas in rubles; she forced international Russian businesses to convert 80% of their earnings in hard currency into Russian rubles. Russia's Central Bank also put a cap on Russian individuals' withdrawals from foreign currency bank accounts.
Nabiullina is not without her critics, however. Skeptics of her hardline tactics say converting so much of Russia's business and trade into rubles is limiting and isolationist.
Russia's economy is suffering. Imports are halted. Inflation is running at 16.7%. Many Russians have been furloughed from their jobs. Some factories, hampered by shortages, have put a moratorium on production.
Panicos Demetriades, a former European Central Bank policymaker who served as governor of Cyprus’s central bank, says those who used to praise Nabiullina were, essentially, duped, as she is a righthand man for Putin. Or, as Demetriades puts it, "second fiddle in Putin's orchestra."
Michael McFaul, a former U.S. ambassador to Russia, says Nabiullina should be sanctioned, along with the oligarchs.
In point of fact, Putin recently renominated her to a third term as governor, a position that has far wider powers than those of other nations' central bank governors or chairman, and after Russia invaded Ukraine and sanctions began flying in, Nabiullina told her staff, "A lot depends on us now, so we must be united. We need to do our job."
Inside Russia, many fault her for permitting the U.S. and its allies for freezing assets of Russia's Central Bank and putting an end to trading with it in dollars and euros.
There are the few, however, who are more forgiving to Nabiullina, reasoning she is merely being loyal to Putin and following her marching orders. The WSJ also notes she has stopped taking questions from reporters and is conveying a more somber tone.
Some hail Nabiullina for cleaning up corruption in Russia's financial sector, for being seeminly incorruptible and for not putting her own political interests ahead of the good of her country.
But the bottom line, some government insiders say, is that Nabiullina is not likely to say no to Putin, regardless of whatever economic, trade or military actions her boss takes.
"She demonstrates her loyalty to Putin every minute, every second,” says Sergei Aleksashenko, former deputy finance minister. "You cannot stay in Putin’s team for 20 years if you’re not loyal."
For Putin, contradictory ideas have no place, and Nabiullina is now demonstrating she will not voice any.
© 2024 Newsmax Finance. All rights reserved.