In the school of Economics lowered its forecast for the ruble exchange rate due to new sanctions


Во ВШЭ понизили прогноз курса рубля из-за новых санкций

The new sanctions will have “a significant, but limited” impact on the economy, but the ruble is weaker than expected, inflation is higher and GDP growth lower to the forecast the Higher school of Economics

New sanctions against citizens and companies from Russia, imposed by the US on 9 April, will lead to weaker (compared to previous expectations) the average exchange rate of the ruble, follows from the forecast of the Institute “development Center” Higher school of Economics (HSE), published in the new Bulletin “Comments on government and business”.

“In 2018, the outflow of private capital (as a rough estimate [HSE] — at $20 billion, from $29 billion to $49 billion) and direct losses from reduced exports will lead to higher annual average dollar rate of 3.5–4. 57 RUB without sanctions to 60.5–61 RUB sanctions (in the average annual price for Urals crude of $67 per barrel),” — said in the review. Dollar jumps to 65 rubles. last week was a shock phenomenon due to a temporary panic, stress the authors. The GDP growth rate will slow down with the expected 1.9 to 1.7% with oil at $67. In General, the new US sanctions “will have a noticeable but limited impact on the macroeconomic situation in Russia,” the authors write.

Exports, according to the first estimates of the HSE, in the years 2018-2019 will be reduced by $3-4 billion is 0,7–0,9% of the total merchandise exports of Russia ($423 billion in 2018, with oil at $67 economists). Exports to USA in 2017 reached $10.7 billion On delivery U.S. aluminum from Rusal Oleg Deripaska — the company is significantly affected by new U.S. sanctions, accounted for $1.4 billion.

The weakening of the ruble will accelerate and prices rise, expect the HSE. Inflation at the end of the year (December to the previous December) due to the imposition of sanctions will make 4,1–4,3% (previously, economists had forecast a 3.6 percent). “Due to the increasing risk of financial destabilization and is already assured of higher inflation, the key rate of the Central Bank is likely to continue until the end of the year near the current 7.25 percent. Interest rates on loans to the nonfinancial sector will also be slightly higher than without the sanctions that will be due to the increase in risks in the economy and higher key rate”, — stated in the report. Earlier, the head of the Central Bank Elvira Nabiullina declared that the regulator will complete the transition to the neutral rate of 6-7% in 2018, and even made the transition to soft monetary policy, if inflation is going to be below 4%.

According to the forecast of the Central Bank, which targets inflation at 4% in 2018, the price increase will amount to 3-4%. On Monday the first Deputy Chairman of the Central Bank Ksenia Yudaeva said that the regulator may raise the forecast on inflation, “but as far as to say it is difficult, it is necessary to further evaluate the situation.”

The announcement of new sanctions have resulted in the “increased volatility in financial markets”, said in Monday’s review of “the economy”, which is the Ministry of economic development. But the reaction of the markets (the weakening of the ruble by 9.3% from 6 to 10 April and the decline in the stock market) were “somewhat redundant”, specify in the Ministry. The dollar rose above 63 rubles, but then the ruble partially won back falling: on Monday, it is currently trading around 62.2 rubles

“With regard to the evaluation of later consequences for the real sector of the Russian economy, it should be noted that in the real sector translated long-term and sustainable change in the financial markets,” — said the Ministry.

Risks from the inside

If the new shocks, the decline in exports and the weakening of the ruble will be temporary, noted in the HSE, although restrictions and will continue to have a negative impact on the economy due to the lower inflow of foreign investments and difficulties with access to foreign markets. However, there are several key risks. First, as noted by the HSE, the introduction of retaliatory sanctions. On Friday the state Duma introduced a bill according to which the President is given the right to impose retaliatory measures against the United States and other countries that supported limitation. The document includes a potential restriction on the import of alcohol and tobacco, agricultural products, raw materials, medicine and “any other goods”. The project gives the opportunity to cease cooperation with unfriendly countries in the aircraft industry, rocket engines, and nuclear energy. It also includes limiting the recruitment of U.S. workers and foreign workers in Russia.

The second risk is that the extension of US sanctions because of Russia’s support of Syria. The U.S. permanent representative to the UN, Nikki Haley said that Washington will present new sanctions as early as Monday, April 16. Press Secretary of the President of Russia Dmitry Peskov said in response that the imposition of sanctions, “acquires the character of an obsession”, and “any economist can easily see the sanctions an attempt by competitors to squeeze Russian companies with international markets.”

The third risk analysts say the increase in the outflow of capital scale more than those $20 billion that they have budgeted for forecast (capital exports in 2018 can be above $50 billion). Valuation while the more positive — he previously predicted outflow of $19 billion.

Finally, the fourth risk, according to the HSE, the reduction in exports more than the projected $3-4 billion Is possible, “since an unknown number of companies and countries that follow the recommendations of the United States,” explain economists. “The effect of implicit sanctions may exceed the effect of explicit, including due to the fact that under implicit sanctions can fall and other products of Russian export,” they warn.

“Versatile tools”

The economic development Ministry on Monday said that the government has “a versatile tool that allows both point and system to absorb emerging risks” because of the new sanctions. These instruments include the suspension of purchases of foreign currency on the windfall from oil for more than $40. The Central Bank, which conducts these operations to the Ministry of Finance suspended them on April 9-12. “The decision has increased the supply of foreign exchange liquidity in the market by approximately $200 million a day. The long-term equilibrium value of the ruble against the U.S. dollar at current levels of oil prices, the current level of the Euro against the dollar, the absence of a new package of sanctions and purchases of foreign currency in accordance with the budget rule since the beginning of 2017 is estimated at around 50 rubles per dollar”, — said the Ministry.

The government is also preparing measures to support sanctioned companies and companies from related industries, reminded the Ministry. Risks “fold increase” volatility in the OFZ market, the economic development Ministry does not see, as the main investors in them are pension funds and insurance companies focused on long-term investments. In this case, “a substantial proportion deals OFZ” this year will go to Russian investors, expects the office (on March 1, the share of nonresidents in the OFZ constitutes 34.2%).


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