Russian Economy General News: #13

What will happen to the ruble and dollar in the fall, by Irina Krasikova for RIANOVOSTI. 09.04.2022.

In the fall, payments by the state and companies on external debts fall; on the eve of the New Year holidays, demand for imported goods rises, so the ruble traditionally weakens. However, anti-Russian sanctions have made adjustments: the currency of friendly countries is increasingly used in mutual settlements, personal savings from dollars and euros are being converted into yuan. What will be the exchange rate as a result - understood RIA Novosti.

For all parallel imports

In March, the dollar soared to 120 rubles. However, at the end of June, it fell to 50 - at least in seven years. Euro - up to 52.

As a result, under the conditions of sanctions and sharply sagging imports, the exchange rate stabilized around 60.

But this is not beneficial for the state. The budget is formed, among other things, through taxes on exporters. Their revenue decreases - less money in the treasury. The weakening of the dollar in the domestic market by one ruble - minus 200 billion.
According to First Deputy Prime Minister Andrey Belousov, the optimal exchange rate for industry is 70-80. "Fifty-five-sixty is too much. Especially against the backdrop of deflation and high interest rates," he explained.

In autumn, several factors will affect the situation. First of all, the growth of parallel imports, which has already reached six and a half billion dollars, as noted by Deputy Prime Minister, Minister of Industry and Trade Denis Manturov.

16 billion are expected by the end of the year. As a result, the export-skewed trade balance will be corrected. And this will weaken the ruble.

Meanwhile, the demand for the currency has not yet recovered. According to the Central Bank, the current account surplus in July exceeded $28 billion, the same as a month earlier.

“As stocks of goods in trade and production run out, imports increase. Plus, people return from vacations and resume shopping,” explains Mark Goykhman, chief economist at the TeleTrade information and analytical center.

minus dollar and euro

Another factor is the rejection of "toxic" dollars and euros, the transition to payments in alternative currencies. In Russia, this figure has already reached 75 percent.

The rest of the BRICS countries are moving in the same direction. In July, the yuan took the fifth place in international trade - more than two percent.

Ahead is still the dollar - the main reserve currency. Of course, in a few months he will not lose this status. However, due to the policy of the West, he is less and less trustworthy. And no one wants to risk assets - neither the population, nor even the state.

Everyone understood that the US and the EU could block the savings of another country at any time. Half of Russia's foreign exchange reserves were frozen, banks were disconnected from SWIFT.

On the other hand, adds Goykhman, one should not forget about the general strengthening of the dollar in the world due to the tightening of the monetary policy of the US Federal Reserve System. If the discount rate is again raised by 0.75 percentage points on September 21, the US currency will rise in price.

And the Russian regulator is not idle. In the first ten days of September, Rosstat will publish data on prices for August. If deflation continues, which has been fixed since the beginning of summer, the key rate will be lowered by 0.23-0.5 points, analysts believe. With a corresponding weakening of the ruble.

In addition, in the fall, the Ministry of Finance may return to the market with an updated budget rule in order to again buy foreign currency on the stock exchange for oil and gas windfalls. This was mentioned in the report of the Central Bank on the prospects for monetary policy for the next three years.

For the benefit of the budget

Much still depends on oil prices. Experts do not rule out $100 for Brent and even higher if the increase in production by OPEC+ countries slows down. Well, gas continues to break records, contributing to the increase in Russia's foreign exchange earnings, despite the reduction in exports. Last week, September futures in Europe reached $3,500 per thousand cubic metres.

It also plays into the hands of the ruble that banks are trying to minimize the turnover of "toxic" currency: they take a commission from customers, complicate transfers. This forces the population to get rid of dollars and euros.

The volume of dollar transactions on the Moscow Exchange fell significantly. For comparison: on February 15 there were such transactions for 405.8 billion rubles, on July 15 - 119.4 billion.

Russians are converting their savings into an alternative currency, mainly the yuan.

Previously, such exotic deposits were offered by no more than ten credit institutions. Now it's massive.

Fyodor Sidorov, founder of the School of Practical Investing, believes that the trajectory of the ruble will be determined primarily by internal conditions - the decisions of the regulator and the government. And external ones - import restrictions, high oil prices - rule out a sharp drop.

With the current geopolitical instability, both up and down movement is possible. According to the consensus forecast, in autumn the dollar may rise to 63-65 rubles, the euro - up to 64-65.

Most experts predict a gradual weakening of the national currency. "In the interests of the budget and subject to the restoration of imports - up to ten percent," warns Ayaz Aliyev, associate professor of sustainable development finance at the Plekhanov Russian University of Economics.

Thus, the dollar will gradually approach 70 rubles, as required by the treasury. And if the trade balance is restored by 2023 and access to Russian assets is returned to "unfriendly" non-residents, a rise to 90-100 is possible.

https://ria.ru/20220904/rubl-1813400143.html

Scorpius wrote:Russian President Vladimir Putin, speaking at an expanded meeting of the SCO summit, said that Russia is ready to transfer 300 thousand tons* of Russian fertilizers accumulated in European ports to developing countries for free. The Russian leader noted that he told UN Secretary General Antonio Gutteris about this in a recent telephone conversation.

Putin also called on Deputy UN Secretary General Rosemary DiCarlo to demand that the EU lift restrictions on the export of Russian fertilizers to third countries.

https://rg.ru/2022/09/16/putin-rossiia-gotova-besplatno-peredat-rossijskie-udobreniia-razvivaiushchimsia-stranam.html

*According to my calculations, this amount is enough to fertilize the soil on an area of about 3.75 million hectares

The stock market fell to February lows, by Sofia Sheludchenko for Viedomosti. 09.26.2022.
Geopolitics continues to put pressure on the market.

The Moscow Exchange index fell below 1900 points for the first time since February 24, falling by 10.56% (1871 points), according to the data of the trading platform at 13:00 Moscow time. The dollar RTS fell by 10.85% to 1017 points. By 14:00, the decline slowed down, the Moscow Exchange index was losing 7.13%, the RTS - 7.35%.

Among the blue chips, the shares of Surgutneftegaz fell the most - by 17.12%. Papers of Polymetall, receipts of TCS Group, shares of Rosneft and Yandex lost from 11.54 to 13.23%.

The ruble, on the contrary, is strengthening: the dollar is depreciating to 57.8 rubles / $, the euro - by 37 kopecks. (55.9 rubles / euro), the yuan loses 4 kopecks. and traded at 8 rubles.

The fever in the stock market began last week, after the news that on September 23-27 referendums will be held on joining the LPR, DPR, Kherson and Zaporozhye regions, and the announcement of partial mobilization. The Moscow Exchange Index collapsed from September 19 to September 23 by 14.2%, the RTS fell by 10.45%. The drop leaders for the week were Polymetall (-32.04%), PIK (-24.1%), Globaltrans (-22.53%), NLMK (-21.79%) and Rusal (-20.99%) %). None of the companies included in the Moscow Exchange index showed an increase in the value of quotations over the week.

Negative moods are primarily due to uncertainty in connection with geopolitical events, says the head of the information and analytical content department of BCSThe world of investments” Vasily Karpunin. Sales on the Russian market are associated with several factors, says Alexander Dzhioev, an analyst at Alfa Capital Management Company: firstly, a strong ruble reduces the revenue of export-oriented companies, which, coupled with falling oil prices, puts pressure on issuers in the sector. But the dollar has slipped below 58 rubles/$ despite falling commodity prices, Dzhioev continues, probably due to a large overhang of currency sellers who are unwilling to take the risks of holding toxic currencies from unfriendly countries. An additional negative is the news about a possible increase in the tax burden for coal companies, the expert adds. Also, do not forget about the risks of new sanctions, he said.

The market may be supported by the payment of dividends, analysts interviewed by Vedomosti said . On Friday, September 30, an extraordinary meeting of Gazprom shareholders is expected to discuss interim dividends for the first half of the year. Dividends are now becoming an important growth factor, notes the head of the department of stock market experts at BCS World of Investments. Gazprom's dividends announced for the first half of 2022 will be paid this time, and before the end of the year and in 2023, a return to payments from other large issuers is likely, adds the investment director of Otkritie Management Company» Vitaly Isakov. The recovery of dividend payments and their return to a long-term growth path will mean good investment results for long-term investors regardless of short-term market revaluation, he says, and the risks are offset by the low valuation of the Russian stock market.

The Russian market's isolation from world stock exchanges can also become a medium-term factor in supporting the Russian market, says Mikhail Vasiliev, chief analyst at Sovcombank : money will continue to be earned and saved in the economy, and there are almost no alternatives to the domestic stock market for domestic investors.

https://www.vedomosti.ru/investments/articles/2022/09/26/942546-rinok-aktsii-perezhivaet-hudshee

Sanctions echo: why inflation in Russia is declining amid record price increases in Europe, by Vladimir Tsegoev and Ksenia Chemodanova for RTRussian. 10.07.2022.

In September, prices for goods and services on average in Russia slightly increased (by 0.05%) after three months of decline. Experts attribute such dynamics to growing consumer demand and the exhaustion of seasonal factors. Meanwhile, in annual terms, inflation in the country slowed down to 13.68%. According to the forecast of the authorities, by the end of 2022, the figure will be close to 12%. The price situation in Russia is gradually stabilizing as the economy adapts to Western sanctions and changing external conditions, experts say. At the same time, the European states that initiated the introduction of restrictions on the Russian Federation are now, on the contrary, facing an increase in the cost of goods due to a lack of Russian energy resources.

In September 2022, inflation in Russia amounted to 0.05% on a monthly basis. Such data on Friday, October 7, were presented by the Ministry of Economic Development and Federal State Statistics Service. As follows from the materials of departments, consumer prices in the country rose slightly after a continuous decline throughout the summer.

Thus, over the past month, the cost of non-food products increased by an average of 0.15% due to increased consumer demand, while services rose in price by 0.51%. Products, in turn, fell in price by 0.38%, although the rate of price decline in this segment slowed down compared to August (1.36%).

In part, the return of inflation in the Russian Federation after three months of deflation is due to the exhaustion of seasonal factors, Pavel Segal, First Vice President of the all-Russian public organization of small and medium-sized businesses Opora Rossii, explained in a conversation with RT.

“In August and early autumn, according to historical data, inflation moderately decreases against the backdrop of a seasonal expansion in the supply of vegetables and fruits. However, now, as we see, consumer prices are returning to their usual trend,” said Segal.

Meanwhile, in annual terms, inflation in Russia in September slowed down from 14.3% in August to 13.68%. Moreover, in the first days of October, the indicator continued to decline and has already dropped to 13.49%.

Consumer prices for goods and services in Russia are gradually stabilizing after a sharp jump in the spring. Recall that if in February 2022 inflation in the country was 9.16% in annual terms, then in March the figure rose to 16.7%, and in April it reached 17.83%, the highest level in the last 20 years.

The main reason for this dynamic was the large-scale sanctions of the West against Russia. Initially, the restrictions caused a panic in the financial and consumer markets of the country. As a result, the ruble on the Moscow Exchange fell to a record low, and the Russians began to massively buy food and goods. All this together provoked a rush price increase.

Under the circumstances, the government agreed on a priority action plan to support the economy, which included more than 300 different initiatives. At the same time, the Central Bank briefly raised the key rate to 20% per annum, which made it possible to avoid even greater price increases.

“At the moment, the economy has already adapted to current events. As we can see, now there is no longer such a rush demand, which was observed in the spring, and therefore prices are falling. Moreover, after a short drawdown, the ruble managed to quickly strengthen, which also had a positive effect on the overall level of inflation, ”said Nikita Maslennikov, head of the Finance and Economics department at the Institute of Contemporary Development, in an interview with RT.

Against the backdrop of anti-crisis measures taken by the authorities and the normalization of the situation in the economy, already in May, inflation in Russia slowed to 17.11% in annual terms, and in the following months the figure continued to decline systematically. It is curious that against this background, the European countries that initiated the sanctions, on the contrary, faced a record acceleration in prices.

“According to the results of last week, it (inflation in Russia. - RT ) dropped to 13.5%. By the way, here in the eurozone - 10%, in the Federal Republic (Germany. - RT ) - 10.9%, in the Netherlands - 17.1%, in Latvia - 22.4%, in Lithuania - 22.5%, in Estonia - 24.2%," Russian President Vladimir Putin stated during a meeting on economic issues on October 6.

Price boomerang

According to the forecast of the Ministry of Economic Development, inflation in Russia may slow down to 12.4% by the end of the year. However, there is every reason to believe that this value will not exceed 12%, said Dmitry Medvedev, Deputy Chairman of the Security Council of the Russian Federation.

In his opinion, the decline in the country's GDP this year will also not be as serious as previously thought. Such dynamics of key indicators suggests that the economy, even in the face of severe sanctions, demonstrates “very decent viability,” the Deputy Chairman of the Security Council believes.

“In general, the West once again failed to “tear to shreds” our economy. The main thing is that Russia has not only the necessary margin of safety, but also all the opportunities for further development, ”Medvedev wrote in his Telegram channel.

At the same time, the double-digit anti-records for inflation observed today in the eurozone are “far from the limit,” the politician added. According to him, Europe is in for a " cold winter without Russian gas", and the lack of energy resources during the heating season can lead to an even greater jump in prices in the region, which will affect the well-being of ordinary citizens.

“At first, our enemies desperately pounded their chests. They convinced their citizens and the whole world that they could easily do without Russian oil, gas, fertilizers, medicines and grain. Without buyers for their burgers, clothes, cosmetics, cars and Internet services. Now they realized that their sanctions are self-mutilation. A typical crossbow,” Medvedev stressed.

According to Nikita Maslennikov, the rise in energy prices in Europe along the chain led to an increase in the cost of production and transportation of most goods, which negatively affected the final cost of production. To curb inflation, the European Central Bank decided to raise the interest rate for the first time in 11 years, although before that it had kept it at zero for a long time.

A similar policy to contain prices today is being pursued by the US Federal Reserve System and the central banks of other developed countries. However, the West's attempts to overcome inflation by raising rates could turn into a new global crisis, warn experts who presented the annual report of the UN Conference on Trade and Development (UNCTAD).

“Changes in the monetary and fiscal policies of advanced economies could push the world into a global recession and prolonged stagnation, causing more serious damage than the financial crisis of 2008 and COVID-19 in 2020,” the organization’s study says.

https://russian.rt.com/business/article/1058188-rossiya-evropa-inflyaciya