Russian oligarch warns of the risk of 3 million job losses due to the artificial strengthening of the rouble

This is reported by The Moscow Times.

According to the report, an overvalued rouble makes Russian goods less competitive on global markets, leads to losses for businesses and could put up to 3 million jobs at risk.

In particular, the metallurgy sector is the export industry suffering most from the overvalued currency.

Deripaska notes that for a country that relies primarily on exports of raw materials and industrial products, a strengthening of the national currency does not lead to economic growth. This is because, for example, if a Russian steelworks sells a tonne of steel abroad for $1,000, at an exchange rate of 100 roubles to the dollar the company receives 100,000 roubles in revenue, but at an exchange rate of 70 roubles to the dollar – only 70,000 roubles.

At the same time, the company pays for wages, taxes, electricity and logistics in roubles, so the stronger the rouble, the less revenue exporters receive.

For the Russian budget, the problem is even more serious. Russia’s main export goods – oil, gas, metals, fertilisers and other raw materials – are sold for dollars or euros.

When the dollar falls against the rouble, the state receives fewer roubles from each export contract.

Deripaska claims that due to the strengthening of the rouble, the budget has already lost trillions of roubles in revenue. Even large Russian corporations have begun to acknowledge the consequences.

Alexey Mordashov, head of the steel company Severstal, recently announced a decline in the sector’s profitability, a reduction in investment and possible staff redundancies. The company has already halted active recruitment and is reviewing its expenditure.

The world’s largest export economies have for years sought to avoid excessive strengthening of their currencies. For example, China has held back the appreciation of the yuan for decades to support exports. Japan traditionally keeps a close eye on the yen’s exchange rate so as not to harm its manufacturers, and South Korea also actively supports the competitiveness of its exporters.

The reason is that a cheaper currency makes a country’s goods more attractive on the global market.

Unlike many developed countries, the Russian economy is heavily dependent on raw material exports. If exporters start earning less, they cut back on investment, slash costs and reduce their workforce.

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