OREANDA-NEWS. April 13, 2010. A number of key figures on Russia’s monetary sphere were released by CBR and the Finance Ministry, reported the press-centre of OTKRITIE FC:

The monetary base was up RUB395.2bn in March to  RUB6,363bn. This represents YoY growth of 48%.

CBR Chairman Sergey Ignatiev affirmed that the M2 money supply grew by 32% YoY  as of 1 April. He also said bank lending showed small growth in March.

The Finance Ministry released Federal budget execution in March 2010, according to which, Minfin’s accounts with CBR decreased by RUB294.2bn.

View: We see the news as positive since it coincides with our view that monetary expansion is the most appropriate strategy at the present time. Given CBR’s USD15bn currency interventions in March they could have increased the monetary base by more than RUB400bn. The RUB138bn fiscal deficit in March should also increase the monetary base. The likely reason that the increase in the monetary base was less than RUB400bn is that unlike accounts of the federal government, those of the general government did not decline. Our view on the M2 figures is mixed. Growth of 32% means that M2 was up by nearly RUB400bn, which is very close to base money growth.

It reveals a continued weakness on credit, and the multiplier M2/MB dropped to 2.5x. We suggest that the growth of credits referred to by Chairman Ignatiev might be due to loans denominated in foreign currencies. With ruble appreciation, the demand for such loans could increase, which could translate into imports growth.