Russian current account surplus could widen to $35 bln in 2014 - Central Bank
MOSCOW. June 18 (Interfax) -Russia's current account surplus could widen to $35 billion in 2014, from $32.8 billion last year, the Central Bank said in a monetary policy report.
Merchandise imports are expected to fall, and capital outflow, which surged at the beginning of the year on demand for foreign currency, should slow in Q2-4. Also, companies should not experience particular difficulty refinancing foreign debt in the period. Private sector capital outflow could be $85 billion-$90 billion in the year as a whole.
The Central Bank views this scenario, which assumes foreign political tension will ease gradually and that there will be no further western sanctions against Russia or other external shocks, as the most likely.
Banks and other sectors are estimated to have removed more than $63 billion net from Russia in Q1 2014, after the influence of FX swaps conducted by the Central Bank with resident banks and changes to the balance of correspondent accounts, this despite a sharp drop in the volume of questionable transactions, to $2.1 billion in Q1 2014, from $9.2 billion in the same period last year. Much of the outflow was caused by resident demand for forex cash.
The growth in outflow increased pressure on the ruble and the Central Bank sold foreign exchange in the currency market in order to smooth volatility in the ruble's exchange rate. These currency interventions exceeded $41 billion in Q1 2014, and were the main reason for the reduction of FX reserves.
But private sector capital outflow is estimated to have decreased considerably in April-May this year.
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