Policy Memos

Does Russia Need to Strengthen the Ruble? Accumulation of Foreign Exchange Reserves and Economic

Policy Memo:


Publication Date:



The International Monetary Fund (IMF), as well as some academic economists, suggest that Russia should run down its foreign exchange reserves (FER) and appreciate (strengthen) the ruble. These reserves grew quickly after the 1998 currency crisis—from $12 billion right after the crisis to over $60 billion by the end of 2003; but IMF experts believe that the ruble is currently undervalued and that a low ruble only stimulates inflation (Financial Times, August 19, 2003). Other countries are being asked to allow their currencies to appreciate as well. John Snow, the U.S. secretary of the Treasury, was recently in China trying to persuade the leaders of the rising superpower to stop the rapid accumulation of reserves and to float the yuan, allowing its exchange rate to rise. President George W. Bush declared, “We do not think we are treated fairly, when a currency is controlled by the government” (Financial Times, September 8, 2003). [...]


About the author

Research Director, Dialogue of Civilizations Research Institute (Berlin); Principal Researcher, Russian Academy of Sciences; Professor Emeritus, New Economic School; Adjunct Research Professor, Carleton University
Dialogue of Civilizations Research Institute, Berlin