Inflation continues to decelerate in September
http://www.bne.eu/dispatch_text16714
Renaissance Capital
September 29, 2011
According to Rosstat, Russia's weekly consumer inflation was 0% last week (19-23 September), after shrinking by 0.1% since the beginning of September; YtD inflation amounted to 4.6%. This suggests to us that September inflation could be around 7.2-7.3% YoY. While we maintain our view that the Central Bank of Russia will leave rates unchanged until the end of the year, we think the deceleration of inflation coupled with strengthening global headwinds could create a slight policy bias towards easing.
The rouble's recent depreciation might increase inflationary pressures, but, as we have argued before, we think that the deflationary nature of the economic backdrop is likely to offset the effect of a weakening rouble, as occurred during the 2009 crisis when inflation continued to decelerate.
We think MoM inflation will stop decelerating in the coming months, and will start to increase due to the increased level of government spending at the end of the year. Nevertheless, the price level at the end of last year was relatively high after food prices were impacted by drought conditions; therefore, we don't expect an inflation hike, and we forecast an inflation rate of 6.9% YoY at the end of 2011.
Natalia Suseeva
Russia Macro View - That Sinking Feeling
http://www.bne.eu/dispatch_text16714
Citi
September 29, 2011
We are cutting our 2012 GDP growth forecast for Russia further to 2.5% - from our forecast of 3.5% in August and 4% before that. We believe global financial turbulence and political uncertainty will weigh on investment and consumer expectations in Russia. We hope this will be the end of the revisions, but the global outlook remains uncertain.
We keep our Brent forecast unchanged at US$86pb in 2012 and lower our global GDP growth forecast to 2.9% - from 3.2% last month and 3.7% two months ago. We still do not expect a global recession for 2011 or 2012 as a whole, but QoQ industrial country growth probably will be close to zero in the next few quarters and is likely to stay well below average to at least end-2012E (Global Economic Outlook, September).
In Russia appetite for systemic reform is limited - The decision for a reverse of the current Putin/Medvedev 'tandem', rather than the introduction a new figure to the leadership structure, suggests that appetite for systemic reform is limited (Political Implications of the Reverse Tandem , 28 September).
Weaker Ministry of Finance suggests higher debt - The administration's main hawk, Minister Kudrin, has been recently replaced by a 'tandem' of the First Prime Minister Shuvalov and a skilled technocrat among the Deputy Ministers of Finance.
Higher pre-election spending should prop up consumption - We expect consumption to remain a driver of GDP, rising by more than 5% YoY in 2011, but decelerating to 3% in 2012. We see social spending and reduced saving propping up consumer demand, but this likely 'leaking' through higher imports and capital outflows.
We believe the ruble basket at 37-38 with Brent at US$86 is fairly valued - Global contagion has recently pushed the ruble lower than seems warranted by oil and rates. However, pressure could intensify if the CBR gives banks ammunition to bet against
the ruble.
Ruble Weakens Third Day This Week Against Dollar, Euro at Open
http://www.bloomberg.com/news/2011-09-29/ruble-weakens-third-day-this-week-against-dollar-euro-at-open.html
Q
By Torrey Clark - Sep 29, 2011 8:05 AM GMT+0200
The ruble weakened for the third day this week against the dollar, retreating 0.3 percent to 31.8498 at the start of trading in Moscow. The Russian currency slumped 0.4 percent at 43.3972 against the euro, pushing it down 0.4 percent to 37.0509 versus the central bank’s target basket.
To contact the editor responsible for this story: Torrey Clark at tclark8@bloomberg.net
SEPTEMBER 29, 2011
http://online.wsj.com/article/SB10001424052970204226204576598970115708018.html
By ANDREW PEAPLE
Russian voters weren't consulted on the deal whereby President Dmitry Medvedev agreed to stand aside for Vladimir Putin in next year's presidential elections. But the markets are having their say.
The Central Bank of Russia this week was forced into its biggest intervention in the currency markets since 2009, as the ruble threatened to fall below its official trading band of 32.50 rubles to 37.50 rubles ($1.03 to $1.18) to a basket of euros and dollars. That could be a sign of things to come.
True, politics isn't the only thing destabilizing the ruble. The recent falls in oil and gas prices have exerted downward pressure, as they have on other resource-rich country currencies, as these commodities make up two-thirds of Russia's exports. When oil prices tanked during the global financial crisis so did the ruble; the central bank spent more than $200 billion in 2008 defending the currency and was forced to raise interest rates.
Since then, the central bank has been reducing its interventions in the currency markets, while widening the trading band. Such moves had encouraged hopes of Russia moving toward a free-floating currency. That, in turn, would give it scope to run a more independent monetary policy, setting interest rates to suit domestic financial conditions.
But the political uncertainty has put those ambitions on hold. Net capital outflows in the first half of this year reached more than $30 billion. This week's sacking of Finance Minister Alexei Kudrin has fueled investor concerns; capital outflows could accelerate to $25 billion to $30 billion in the fourth quarter alone, ING forecasts. If Russian households start switching deposits into foreign currency, as they did in 2008, pressure on the ruble will increase.
The central bank now has decided to freeze the trading band, a setback for its liberalizing ambitions. Unless oil prices recover, or the political outlook suddenly improves, it faces digging into its reserves again to hold the ruble line.
05:34 29/09/2011ALL NEWS
Russia strengthens positions at world grain markets |
http://www.itar-tass.com/en/c154/235881.html
ROSTOV-ON-DON, southern Russia, September 29 (Itar-Tass) – Russia is strengthening its positions in the world market. The president of the National Union of Grain Producers, Pavel Skurikhin, says that the Grain Russia-2011 international conference, which is taking place these days, provides a convincing proof of that.
"More than 250 delegates from 20 countries are attending the conference, an unprecedented number for this kind of event. Turkey has sent 80 people to the conference. Its plans are ambitious. Turkey wants to triple flour production in the next few years and counts mainly on Russian grain,” Skurikhin went on to say.
He said the participants in the conference had come to Rostov-on-Don with specific tasks. “We saw how representatives of grain producers, grain processors and consumers were actively engaged in talks. Even if they haven’t struck any deals on the sidelines of the conference, they are definitely going to do that after all the details of the deals have been finalized,” Skurikhin explained.
He emphasized that grain exports remained an important income item and a source of currency revenues for the Russian state budget. Skurikhin called for consolidation of Russian positions in world grain markets.
The president of the National Union of Grain Producers said his task was to create cooperative marketing associations of consumers for the purpose of streamlining the sales of grain, including exports, to put big and small producers in an equal position and to be able to pursue a common grain policy.
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