Russia Shows Surplus on Both Current & Financial Accounts
OREANDA-NEWS. July 06, 2010. CBR released its first estimate concerning 1H10 balance of payments. The current account remained positive (USD16.9bn) in 2Q10 on the back of a USD37.4bn trade surplus. Meanwhile, the 1Q10 outflow on the capital account turned into an inflow in the 2Q10, reported the press-centre of OTKRITIE Financial Corporation.
View: The current account surplus was up 130% YoY, but still almost halved from the previous quarter due largely to seasonal factors. We remain concerned with the acceleration in imports in 2Q10, from 19% YoY in 1Q10 to 33% YoY, which in our view indicates that the improvement in local demand is increasingly being matched with imports flows.
Export revenue stayed almost unchanged from the previous quarter due to stable oil prices, hinting at Russia’s failure to boost exports (2/3 of which are comprised of fuel). Over the next quarters the trade balance and the current account surplus will likely shrink, implying very limited room for further ruble appreciation.
The capital and financial account surplus of USD 14.7bn was largely backed by the USD 4.5bn inflow of private capital and the placement of sovereign bonds. However, continued non-repatriation of export proceeds or non-supply of goods and services against import contracts (USD 7.1bn) and high net errors and omissions (USD 5.5bn) underscore the fragility of the surplus on the financial account.