Low export earnings put pressure on the ruble

According to the Central Bank, the current account surplus of the balance of payments in January 2023 decreased to $8 billion, which is 2.4 times lower than the value of January 2022 and the minimum since mid-2021, excluding December 2022 (see Kommersant dated 24 January).

The main role in reducing the current account surplus was played by a significant decrease in the positive balance of trade in goods and services due to a decrease in the cost of exporting goods, the regulator explains (see chart). Against the backdrop of current price ceilings for Russian oil and petroleum products and a seasonal increase in imports at the beginning of the year, the foreign trade surplus amounted to $9 billion in January, decreasing 2.3 times year-on-year, to a minimum since 2021. An indirect evidence of the decline in oil and gas revenues is the FCS data on the fall in budget revenues administered by the customs authorities in January 2023 by 31.3% in annual terms (see “Today’s number”).

Accruals in favor of non-residents of investment income decreased. The negative balance of primary and secondary income in January 2023 was at the level of $1 billion against $2.1 billion a year ago. The positive balance of the financial account of the balance of payments was formed by a decrease in liabilities to non-residents and an increase in foreign assets of the Russian economy, the Central Bank explains.

Against the backdrop of a reduction in foreign exchange earnings, yesterday’s trading results on the Moscow Exchange recorded a weakening of the ruble: all currencies updated their highs since the end of April 2022. “Demand for the currency is also supported by an increased budget deficit and inflationary expectations. In turn, the pressure on the national currency increased due to the global strengthening of the dollar,” explains Vladislav Danilov from Pervaya Management Company. “The pressure on the ruble continues to be exerted by a reduction in foreign exchange earnings due to sanctions restrictions and a geopolitical discount in prices for Russian raw materials supplied abroad. The situation is aggravated by increased budget expenditures,” agrees Dmitry Babin from BCS World of Investments.

At the same time, “the downward trend in surpluses is stable – we will see this reflected on Friday in the updated forecast of the Bank of Russia,” says Rodion Latypov, the author of the Solid Numbers Telegram channel.

Artem Chugunov