Page 78 - RusRPTAug21

The budget rule has a lot to do with why geopolitical risks became the primary market mover for daily to weekly or monthly fluctuations in the exchange rate. ING estimates that the oil price recovery will boost the balance of payments surplus by about $10 billion from $55 to $65 billion. That inflow will have to be ‘sterilized’ with more currency interventions — they could reach $33 billion for the year. According to Dmitry Dolgin, that figure could be reduced by $3-5 billion if the government manages to invest an analogous amount from the National Welfare Fund in 2021-2023. But economic recovery in the second half of the year could pressure the balance of payments and create some currency risks because of the size of MinFin’s purchases.
On June 3 it looked like a surge in demand for rubles linked to Rosneft’s dividend payments was enough to pressure the ruble 1.7% downwards against the US dollar for the week. Currency risks are highly concentrated in Russia’s largest exporters, particularly ones that convert foreign currency earnings into ruble dividends. However, prolonged economic fallout from the current wave of the virus will probably undermine some of the expected import gains from higher oil prices.
78 RUSSIA Country Report August 2021 www.intellinews.com