All factors support first deputy chairman of the Central Bank of Russia Alexey Ulyukaev's expectation that the outflow of capital from Russia will continue in the next few months.
Photo: Grigoriy Sobchenko
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Strong Euro Draws off Russian Capital
In their latest review of the Russian economy, economists at the Center for Development have estimated the outflow of capital from Russia in January and February at $28 billion and have identified a new factor encouraging that tendency. Ruble assets are gradually losing their attractiveness as the euro strengthens.
Officially, the Central Bank has set the outflow of capital in January at $9 billion. February data are not available yet. The Bank's calculation methods differ from that used by the center. First deputy Bank chairman Alexey Ulyukaev commented at a meeting of the Russian Union of Industrialists and Entrepreneurs that “It is quite likely that the tendency will continue in February, March and April.”
“Taking into account the average interest on ruble instruments, ruble savings are gradually losing their attractiveness in comparison with investments in euro assets, which will contribute a slower influx of capital and stronger outflow of it (that tendency has already been observed in January and February 2008),” the Center for development experts write. Thus, the rising euro make the European Union more interesting for international investors who had previously been oriented toward Russia, as Russian government bonds give way to European securities in income. The strengthening of the ruble was a significant factor in the increased influx of capital into Russia in 2007.
“The income now on short-term state bonds in rubles is 6 percent, and in euros 3.5 percent. Taking the strengthening of the euro into account, the income of the former becomes 13 percent, and of the latter 18 percent,” explained Oksana Osipova of the Center for Development. However, Gennady Solntsev of the Center for Macroeconomic Analysis and Short-Term Forecasting notes that “The tendency for the euro to strengthen can lead only to a short-term outflow of speculative capital and in insignificant volumes.” He attributed the January outflow mainly to the mortgage crisis in the United States.
www.kommersant.com
All the Article in Russian as of Mar. 05, 2008
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