By Andrei Skvarsky.
A top analyst at Sberbank, Russia’s biggest lender, has argued that the current oil price rise and the consequent re-appreciation of the rouble represent a stable long-term trend but that both the oil price and the Russian currency are likely to sag again before resuming their upward movement.
Vladimir Pantyushin, chief strategist at the bank’s investment arm, Sberbank CIB, argued at a briefing in Moscow that the Russian economy is marked by two abnormalities.
One is that the rouble is much too dependent on oil, and the other is that domestic prices are over-dependent on the rouble’s value versus the dollar, according to Pantyushin.
The analyst put the current oil price/rouble correlation at 90% and said a correlation of between 30% and 40% would be normal.
The surge in inflation that closely followed the rouble plunge that began in 2014 was also a lot bigger than normal, according to Pantyshin.
However, inflation has been slowing since November 2015, and Pantyushin forecast it would fall to between 8.5% and 9% by the end of 2016.
In fighting inflation, the central bank is likely to carry out two reductions of the key interest rate before the end of this year, cutting it by a total of 1%, the strategist said.
“Currently the gap between the key rate and inflation is rather large and the central bank’s policy is quite conservative,” he said.
According to Pantyushin, near-term macroeconomic forecasts for Russia should not solely be based on oil price dynamics and geopolitical developments, which are usually the first factors to be cited as the main sources of the country’s economic woes.
The volatility of the yuan and China’s stock market and rate hikes by the US Federal Reserve should also be taken into account, the strategist said.