Page 43 - RUSRptApr17

The CBR has published its first estimates of the balance of payments for 1Q17 with a current account surplus of $22.8bn, significantly more than VTBC estimate of $13.8bn and the Bloomberg-compiled consensus of $18.8bn.
The data surprises on the current account have limited potential to affect the FX market in a floating exchange rate framework. Having said that, bankers note the increase in the banking sector’s accumulation of foreign assets, which might be enhanced by the further recovery imports expected in the coming quarters. We reiterate our FY17F average $RUB of 61.9.
The private capital outflows of $15.4bn in 1Q17, the most since 2Q15.
While net private sector liabilities to the rest of the world have increased, the banking sector has increased its holdings of foreign assets by $17bn, the most since 4Q14 (when the increase was $26.1bn).
The pattern that had tended to dominate the behaviour of the banking sector over the previous two years was different: external deleveraging funded by foreign assets sales.
The public sector contributes to demand for foreign assets as well. The change in international reserves reached $11.3bn, which is largely due to two factors: the banking sector repaying the FX repo debt (approximately $6.5bn) and FX purchases in the last two months of the quarter according to the ‘transitional’ fiscal rule framework.
Exports of goods totalled $82.1bn vs. VTBC estimate of $81.5bn. A more favourable commodity market backdrop and the marked appreciation of the REER has contributed to a 51.5% y/y increase in the exports of oil, gas and petroleum products, while other types of goods brought in just 17.9% y/y more revenues for a total of $33.1bn (vs. our estimate of 28.2% y/y growth).
43 RUSSIA Country Report April 2017 www.intellinews.com