Russia: The current account surplus rises once more
Overview:
The current account surplus in Russia continues to rise. In H1 2010 it was more than double that recorded in the corresponding period of 2009. While the first quarter of 2009 was adversely affected by the gas crisis with Ukraine the situation is improving even stripping out that positive base effect. The capital account is stabilising too. Russia is not yet getting the large capital inflows it once did but at least the large outflows seen in 2008/2009 have abated. These favourable balance of payments trends have led to both a nominal appreciation of the Ruble and gradual accumulation of FX reserves. Both were adversely affected by the crisis but are now recovering. This is set to continue. The Central Bank will determine how much will come in the form of currency appreciation and how much in higher FX reserves.