Competition due to national currency depreciation equals price dumping

According to the Central Bank, relying on this policy in the medium and long term would mean to participate in the race to lower wages with poor countries with an excess of cheap labor

MOSCOW, May 15. /TASS/. Competition through the artificial undervaluation of the national currency equals price dumping, which does not stimulate growth of quality and production efficiency, as well as the welfare of the population, according to the analytical note of the Research and Forecasting Department of the Russian Central Bank.

According to the Central Bank, relying on this policy in the medium and long term would mean to participate in the race to lower wages with poor countries with an excess of cheap labor. The department’s experts believe that this would require an ever more severe understating of the real exchange rate and wages, low standards of consumption.

“In the modern world of global production chains, the exchange rate ceases to be a source of competitiveness for a growing number of goods. It is very rare if an industrial commodity is fully developed and produced in only one country. Competition in the modern world shifts to competition in quality, production effectiveness and image of goods. Attempts to compete only in terms of price will eventually lead to growth of technological gap,” the regulator said.

 

 

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