Interview with Gary Dugan
GD: “So far things have held up relatively well, but with the fall in the oil price and with the collapse in external demand for many of your exports, you will start to see a very significant slowdown, probably taking growth, in aggregate, to maybe a very low 1 or 2 percent for 2009. The pressures of a low oil price next year, and with the problems you are seeing with continued outflows from emerging markets in general, that the Rouble may fall as far as 20% from current levels against the dollar. However bear in mind that there will be an eventual recovery, and that maybe within 18 months you will be back to the current level against the dollar.”
RT: How long do you expect huge inflows into the dollar to continue to destabilize emerging market currencies, and what in your opinion will be the future of the dollar?
GD: “In the very near term the dollar is likely to remain strong. We are seeing many many currencies under pressure. And because those currencies are under pressure the locals, whether that be it in Brazil or here in Russia, or other parts of the world, are converting into dollars. But once you get past the worst part of this global slump, possibly the 2nd and 3rd quarter of next year, then I think the dollar will come under pressure as people go back to their local currencies. But also people look at the problems of the world, and they’re very much centred on the financial system in the United states, and the government there is going to have to issue a lot of debt in the future. So longer term, to my mind, the dollar can only go down.”
RT: The International Energy Agency says oil demand will recover but supply will not, which suggests Russia’s position as a source of energy earnings is secure. Do you agree?
GD: “We think the oil price could be down to around $40 – $45 dollars for the first half of next year, before maybe modestly recovering back towards $50. Longer term I believe, I agree with the international agency in terms of its forecast. Demand will recover, countries such as China will still be strong importers, and supply is still relatively well constrained. Here in Russia I think you will benefit from significantly higher oil prices in the future, and we in fact, over the next two or three years, could see prices go back to the $120 mark.”