Sberbank CEO Feels the Ruble Is Still ‘Unjustifiably Undervalued’

  • Sberbank CEO Herman Gref said the Russian currency should be trading at 80 to 85 rubles to the US dollar.
  • The ruble is now trading around 96.5 to the dollar. The currency has fallen nearly 30% so far this year.
  • But on Tuesday, Russian President Putin tried to project an image of economic calm.

The boss of Russia’s largest bank is unconvinced that the ruble is in a comfortable position — even though Russian President Putin has downplayed the currency’s weakness. 

“The ruble’s exchange rate is unjustifiably undervalued,” Herman Gref, the CEO of Sberbank, told the state-owned Rossiya 1 TV channel on Tuesday, per Interfax’s translation. He is sometimes referred to as German Gref.

Gref said the exchange rate should be 80 to 85 rubles to the dollar, based on a “detailed analysis of the ruble’s fundamental value.”

The Russian currency has lost about 30% in value this year — it hit a 16-month low in August, crossing a key barrier of 100 rubles to the US dollar. The ruble is now trading at 96.5 to one dollar.

One painful side effect of the currency’s weakening is that it makes imports more expensive.

Gref appeared hopeful that the ruble would reverse its decline, saying it could reach his desired levels “if the government takes the appropriate steps and finds a way to resolve this situation.”

Gref’s comments came just as Putin sought to project an image of calm in the country’s economy at an economic forum on Tuesday. 

Putin downplayed the ruble’s weakness, saying: “In general I do not think that there are any completely insurmountable problems or difficulties here,” per AFP. 

The Russian leader even praised the country’s central bank, which raised interest rates by 350 basis points to 12% in August to prop up a weak ruble.

Russia’s economy has been deeply impacted by Western sanctions ever since it invaded Ukraine, even if there’s some support from the Kremlin’s wartime spending.

The impact of the sanctions on Russia’s economy and currency has fuelled inflation. So much so, that the country’s economic development ministry raised the inflation forecast for the year from 5.3% to 7.5% on Tuesday. 

Despite his public views about the ruble’s valuation, Putin acknowledged that Russia’s high inflation rate is causing difficulties for the country’s economy, adding that it was “practically impossible” for companies to make business plans.

Russian inflation accelerated 5.15% year-over-year in August, well above the central bank’s 4% annual inflation target.

Sberbank and the Kremlin did not immediately respond to requests from Insider for comment sent outside regular business hours.

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