Russia will have to continue easing interest rates to keep the rouble under control and further stimulate lending, according to Finance Minister, Alexei Kudrin.

Kudrin said the strength of the currency was complicating recovery prospects for Russian exporters.

“If we reach the inflation target of 6.5 to 7.5 percent this would be a reason for a small decrease in the refinance rate. I expect an increase in lending of 5 to 10 percent – the latter is the optimistic forecast. A slow growth in lending does not necessary mean that the second wave of crisis is coming. Lending follows growth in the economy. As demand rebounds, companies start producing and need loans.”

Despite the threat of further rate cuts, the rouble is set to post its third weekly gain. Aleksey Moisseev, Chief Economist at Renaissance Capital says the carry trade and Russia’s current account surplus are likely to mean continued strengthening pressure on the Russian currency.

“One of the reasons of course is the carry trade. Interest rates in Russia are still higher than elsewhere and people are looking to borrow at lower rates elsewhere and invest at high rates in Russia. But the fundamental reason of course is that the current oil price on Russia is posting a significant current account surplus, which is excess of exports over imports. Clearly exporters are selling dollars and euros which importers are not buying and that results in a stronger currency. It is clear that at the moment a lot of industries in Russia are not prepared for a stronger rouble. They are going to have to prepare themselves otherwise the monetary policy in Russia is going to continue to be really dependent upon FX flows rather than interest rates, but I am not sure that the central bank is prepared to move that quick now.