Interview with Yaroslav Lissovolik

As the Russian Rouble hits its highest point against the U.S. dollar in almost a decade, Yaroslav Lissovolik, chief economist from the Deutche UFG Group shared with RT his opinion on what this means for the Russian economy.

Russia Today: Remembering the financial crisis of 1998, I first came to Russia as a student in that year, and I vividly remember the queues outside the banks, people lining out to change their money into dollars as fast as they could, there was no cash in the cash machines. What are your memories of that time, both as an economist and as in person?

Yaroslav Lissovolik: Well, that was the year when the rouble depreciated by 40%, when Russians indeed fled from roubles to dollars, the dollar was really the Russians’ ‘best friend’ at that time. People converted their savings from roubles into dollars and put those dollars under mattresses, because not many people trusted the Russian banking system in those years. It was the period of non-payments, social dissatisfaction, basically, not the best year in Russia’s economic history.

RT: There have been lots of demonstrations recently. Several months ago the government passed a law dealing with the idea that it is essential to talk about the prices of things in roubles rather than in dollars. There was also a demonstration by ‘Nashi’ (‘Ours’), the youth group that supports President Putin’s government. They stood out in the streets pretending to raise money which they said was ‘for the dollar’s trip back home’. How do you think having a strong currency makes people feel about being Russian?

Y.L. I think the stronger the rouble the better it is for most Russians. The stronger the rouble the greater the purchasing power of the Russian consumer is, and accordingly the greater the consumer confidence of ordinary Russians and this is what we are seeing. And of course, the stronger the rouble, the more Russians can buy when they go abroad. As we know, Russian tourists are everywhere these days and obviously this is a significant boom for them as well when they go abroad.

RT: The rouble is still seen as one of the most undervalued currencies in the world. Why is it so?

Y.L.: First, there is significant pressure on the rouble to appreciate: high oil prices, very high foreign direct investment flow into Russia. All that means that fundamentally the rouble should be strong, but on the other hand, the Central Bank of Russia is not allowing the rouble to appreciate that much. It is preventing the rouble from appreciating by undertaking interventions in the foreign exchange market. So, the reason is the policy of the Central Bank whereby we do still see significant undervaluation of the rouble.