Page 47 - bne IntelliNews Country Report: Russia Dec17

October of $2.3bn vs $1.2bn for the whole of the third quarter, despite a large net capital outflow of $2.8bn that partly offset the effect of high oil prices.
The results implies that the annual current account surplus is likely to approach the $35bn mark this year, estimates Alfa Bank, adding that that is $10bn better than its initial estimates.
Raiffeisen Bank International (RBI) said in a note: “Despite the expected improvement of the current account in the fourth quarter, the negative pressure on RUB is going to come from external debt redemption and the loan to be granted by VTB to China Energy Company (CEFC)."
Analysts had been concerned as Russia’s current account surplus has been falling, making the currency more volatile and prone to commodity price swings. Early this year some analysts speculated that the current account could go into deficit for the first time in more than a decade.
The improvement comes amid a favourable commodity prices environment. But net private capital outflows reached $23.8bn for the 10 months of this year against $8.6bn for last year. The main contribution came from banks’ transactions associated with an increasing redemption of external liabilities.
“We attribute this better than expected figure to the effect of strong oil prices: oil prices averaged $53/bbl for 9M17 and now exceed the $60/bbl level; this factor alone is expected to bring in around $8bn in extra export revenues for Russia in 4Q17. The surprising fact is that despite strong oil prices and better current account figures, the ruble exchange rate has remained weak in the recent weeks; the CBR reported a $2.8bn net capital outflow for October, a figure, which exceeds the current account surplus and thus puts pressure on the currency. Despite stronger oil prices, we reiterate our RUB60/$target by the year-end,” according to Natalia Orlova, chief economist at Alfa Bank.
47 RUSSIA Country Report December 2017 www.intellinews.com