REANDA-NEWS. July 10, 2009. Event: According to CBR, Russia’s monetary base was up 5.4% to RUB4.97 tln. In annual terms, however, growth is still negative (-8.4% YoY), reported the press-centre of OTKRITIE FC.

View: In June, Russian banks redeemed about RUB150bn of loans to CBR, and CBR was not active in the currency market, having bought only ~US1.5bn.

Against such a backdrop, Russia’s monetary base should have declined by approximately RUB100bn, without an increase in the government’s deficit. In point of fact, the monetary base actually grew by RUB255bn, primarily due to accelerated fiscal spending. We believe that this is good news, and we hope that M2 will follow the same path.