Corrected: Current ruble exchange rate could lead to over $20 bln in capital inflow in 2017, but unlikely to be maintained - Finance Ministry
(To change "flow" to "inflow" throughout)
MOSCOW. April 10 (Interfax) - If the ruble's exchange rate continues to stay around the current level, Russia could receive more than $20 billion rubles in capital inflow in 2017, even though the scenario is unlikely to materialize, Deputy Russian Finance Minister Vladimir Kolychev said.
"Since the start of the year, we have seen a divergence in capital flow in comparison with the previous year due to the ruble's value, which strengthened in Q1. If this year we had capital outflow of around 1.5% of GDP, and if the current exchange rate is maintained until the end of the year, then we will have capital inflow of around 1.5% of GDP for the year. Last year capital outflow was $20 billion. Right now GDP is somewhat growing in dollar-terms, and so it will be somewhat more than $20 billion in capital inflow," the minister told journalists in Moscow.
Last week, Russian Economic Development Minister Maxim Oreshkin said that the ruble's exchange rate was at the moment significantly overvalued compared to its 'model level' and was due for a decline soon. He said the rate at the end of the year would be 68 rubles to the dollar. The Economic Development Ministry included this exchange rate in its baseline scenario if oil prices decline to $40 per barrel by the end of the year. At the moment, oil prices are averaging $45.6 per barrel for the year. If oil prices remain at current levels, than the Economic Development Ministry expects the ruble's exchange rate to total 63-64 rubles to the dollar.
"Our estimates of the proper exchange rate are probably closer to those of the Economic Development Ministry. We think that the level of capital inflow which the current ruble exchange rate presupposes is unlikely to be maintained," Kolychev said.
"In Q1 there was similar capital outflow, but we need to remember that Q1 forms the basis for the year. If we are going to compare the outflow by season, then indeed there was capital inflow in Q1," he said.
He said that the seasonal nature of the current account balance also had a "psychological effect" on the market. "If at the moment we have quite high seasonal capital inflow on the current account balance, then sometime in June the existing current account deficit will arise at present exchange rates. And besides the immediate direct effect, the psychological effect could also influence capital flow," he said.
"Most likely, we expect capital outflow in 2017 to return to the level in 2016, around 1%-1.5% of GDP, but it is unlikely there will be capital inflow," he said.