Foreigners are fleeing from the Russian OFZ market

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USA may impose sanctions against European companies. Foreigners are fleeing from the Russian OFZ market. The Russians continue to drown in debt.
The administration of Donald trump’s plans to impose sanctions against European companies 5 associated with the construction of Nord Stream 2. Earlier, the United States tried to convince its European partners that we should abandon the joint project with Russia. The negotiations did not lead to the result of a number of key figures in the administration of the American President believe that other exit, except how to introduce restrictive measures against European companies for the decision of this question does not exist. If sanctions are imposed, then Gazprom will have to abandon the second line of Nord Stream.
Meanwhile, the Russian OFZ market in may took another 100 billion rubles. We will remind that earlier a similar amount was withdrawn from the market debt in April, this was announced by the Chairman of the Central Bank Ksenia Yudaeva. For two months the share of non-residents in the Russian Federal loan bonds decreased by almost 10%. It is considered as a main factor of the weakening of the Russian currency.
Today at auction Moscow exchange rate of the dollar is around 61 rubles 90 kopecks, the Euro traded at the level of 72 rubles 65 kopecks. The MICEX index rose to 2315 points, quotes of Brent oil fell back below $ 76 per barrel. Bitcoins according to CoinMarketCap kept just above 7600 dollars.
We have already repeatedly said that the carry trade with the Russian ruble and bonds of the Ministry of Finance, it is a time bomb. Over the last few years we have seen an inflow of foreign capital on the debt market. This led to the strengthening of the domestic currency. However, the current decline in oil prices, the reduction in the rate of the Central Bank and Western sanctions have an effect. The foreign money is leaving the Russian market. It’s even more pressure on the Russian currency market. To external factors of pressure on the ruble may soon will be added and internal factors. The Ministry of economic development predict a slowdown of the economy in 2018 and a rise in inflation.
However, most Russians do not see any growth in the economy. The population continues to sink in debt. According to the Federal bailiff service of 2.3 million people in Russia are travel abroad because of debts. The total debt according to the Agency is more than 4 trillion rubles, almost half of which is debt. To call numbers not threatening, but the fact that the debt burden is increasing despite the reduction of the key rate – quite a Wake-up call.
The financial authorities of the country is now practically drove themselves into a corner. Bet on the high rate of the Central Bank and low inflation for several years have no visible effect. The actions the Bank of Russia continues to strangle the economy. Rosstat as may draws in their reports of positive numbers, but real improvement in the economy there. Even Mineko has worsened the Outlook for GDP growth in 2018. Here we see a high dollar at a pretty expensive oil. We are also seeing a lack of effective demand at relatively low interest rates on loans and increase debt.
And to back up just makes no sense. Therefore, most likely, we are waiting for a couple of years of “stability” with low inflation, a slow decrease in the rate of the Central Bank, low growth economy, weak consumer demand, and new records in the foreign exchange market. Well, unless “abroad” will not help us. But, obviously, we do not need it. So do the conclusions and, if you introduce such a unique opportunity – to buy a dollar for 60.
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Gleb Zadoya,
The head of the analytical Department of the company,
ANALYST Online