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Weekly Lists
October 12, 2018 www.intellinews.com I Page 29
bne:Credit
Russian central bank's worst case scenario assumes $35 oil, recession
Turkey’s anti-inflation moves ‘unnerve investors’
With oil prices currently over $80 per barrel and expected to top $100 soon by some forecasts, the Central Bank of Russia (CBR) has been planning for the worst and has a pessimistic scenario where oil falls to $35 and causes a recession in Russia next year.
The CBR’s “risk” scenario has oil at $35 in 2019. In this case, Rus- sia’s GDP will go negative and the ruble will fall to between RUB80 and RUB100 to the dollar, the deputy chairman of the central bank, economist Ksenia Yudaeva, said during a speech in the Federation Council on October 8.
However, the CBR’s “basic” scenario has oil prices at $55, which is higher than the average level of $40 that has been used in the last two years. The “optimistic” scenario has oil at $70.
Turkey's move to declare war on runaway inflation by calling on the country's businesses to cut retail prices by 10% for two months is unnerving investors, VOA reported on October 10.
Analysts are warning the radical strategy could hurt an economy that is already struggling. "It's unusual to announce an anti- inflationary package without a reference to monetary policy," senior economist Inan Demir of Nomura International reportedly said.
"I would say there is a reason, economic theory, and past experience favour monetary policy because measures to control prices have serious side effects," Demir added.
In launching his "war on inflation,” Finance Minister Berat Albayrak attacked unnamed companies for "speculation, opportunism and stockpiling". Police have raided businesses, accused of speculation and shops and supermarkets are now being checked for "price gouging.”
Romania raised €1.75bn of funds with two Eurobonds issued on October 4, with maturities of 10 years and 20 years.
The yields reflect higher risk compared to the previous Eurobonds issued in February, while the Treasury remains €750mn below the full-year target external borrowing after the issues, which is likely to tighten the domestic money market.
The Treasury announced that the issues were oversubscribed, with the volume of orders placed by an investor base, diversified in terms of location and type, exceeding the target size by 60%.
Romania raises €1.75bn with double Eurobond issue