Credit Suisse has published its Russia and Emerging markets economics with analytical forecasts for Russia and other emerging markets
Credit Suisse has published its Russia and Emerging markets economics with analytical forecasts for Russia and other emerging markets
The central bank (CBR) will resume its 12-month FX repo auctions on 14 December. These operations were suspended by the CBR since 1 June when the rouble strengthened to around 50 against the dollar. The CBR also revised higher the cost of 12-month dollar funding to Libor plus 300bps, compared to Libor plus 250bps previously. In its statement, the CBR noted that the limits on these auctions will be set according to the conditions in the FX market. Moreover, the CBR will be flexible in reducing the duration of the FX repo operations by substituting 12-month loans with one-week and one-month operations.
We do not see the resumption of these operations as a sign that the banking sector has a shortage of dollar liquidity. According to the CBR’s comments, the decision was taken in order to provide banks with more options of FX liquidity management. In our view, if the situation in the FX market improves, the CBR will roll back the FX repo auctions that are coming due in 1Q 2016.
On Saturday (28 November), President Putin signed the decree on economic sanctions against Turkey. The list of sanctions includes a ban on food and non-food imports, restrictions for Turkish enterprises to do business in Russia and a ban on chartered flights between the two countries. The exact list of bans and restrictions will be revealed by the government today. The decision to impose sanctions against Turkey will
be positive for the current (due to lower goods and services imports) and financial account (since 2007 Russia’s cumulative FDI inflows exceeded those from Turkey by roughly $7.8bn) of the balance of payments but negative for inflation in Russia.
On Friday (4 December), Rosstat will publish the November inflation data.
We expect monthly inflation at 0.6% mom, which is consistent with a drop in year-on-year inflation to 14.9% from 15.6% in October. Our forecast is in line with the Bloomberg consensus forecast.
