reports
- Tatiana Orlova
Russia: Time to pause monetary easing
The recent announcement of a new round of US sanctions and escalation in geopolitical tensions rocked Russian markets. Since the previous CBR policy meeting in late March, the rouble has weakened by 7% vs. USD, prices of Russian bonds have fallen and the stock market has lost more than 7% of its value. The CBR is likely to switch into a cautious mode until it has more clarity on the inflationary impact of the recent developments. We expect it to halt its easing cycle in April, and remain on hold...
- Tatiana Orlova
Russia Instant Insight: Central bank is due to hold regular policy mee...
Since the previous policy meeting held on 9 February, a new bout of geopolitical tensions has replaced the global market turmoil. As before, we expect the CBR to remain on a steady course and continue easing its policy at the next meeting due on 23 March. We expect a 25bp cut next Friday; meanwhile, the outlook for 2Q now appears cloudier. We think that fiscal policy after the Presidential Election scheduled for 18 March will likely be the main determinant of the path of CBR’s monetary policy in...
- Tatiana Orlova
Sovereign Update / Russia
Ahead of the presidential election scheduled for 18 March, the government has announced that it is planning both a Eurobond swap and new Eurobond issuance this month. The recent upgrade of Russia’s sovereign external debt rating by one notch to BBB- by S&P creates a favourable backdrop for these plans. Still, we are not convinced that the tightness of Eurobond spreads is going to persist in the coming months. The recovering economy and relatively stable oil prices provide a positive environment...
- Tatiana Orlova
Sovereign Update / Belarus
Belarus is preparing to tap external debt markets in the coming weeks. Based on the recent success of Eurobond placement by Egypt, its rating peer, we believe it should be able to attract funding on favourable terms. Investors who remain hungry for high-yielding debt despite the recent global market jitters should appreciate evidence of recovery in production and exports, low inflation and prudent fiscal policy. In the near term, risks to macroeconomic stability appear moderate; however, the eco...
- Tatiana Orlova
Russia Instant Insight: CBR cuts its policy rate by 25bps, sounds dovi...
Today the CBR cut its policy rate by 25bps to 7.50%, in line with the market forecast and our expectations. The meeting minutes transmit a dovish signal, as the CBR has explicitly stated its intention to continue easing as it sees a much lower probability of inflation exceeding its target in a near term. However, it has also communicated that its easing cycle is likely to end this year. We continue to see a 25bp cut in March. However, we also see an increasing risk of another drop in the oil pri...
- Tatiana Orlova
Instant Insight/ Russia: CBR policy meeting preview
Amid market turmoil, EM central banks need to send a message that they remain in control. Against the backdrop of weaker growth and subdued inflation in Russia, the CBR will likely continue easing at its February meeting despite the choppy global waters. We expect a 25bp cut, and see a potential for a 50 bp reduction in the key rate by the end of the current quarter. Also, we think the markets are too quick to dismiss the threat of US imposing further “biting” sanctions on Russia. The generic...
- Tatiana Orlova
Russia Instant Insight: Implications of "Kremlin List" published by US...
On 29 January, the US Treasury published the so-called “Kremlin list” of top Russian officials and oligarchs that can potentially become subject to further US sanctions in the future. The market reaction to the publication of the list was cautious, which we think is justified in the short term. The sweeping nature of the list, which includes practically all Russian oligarchs, may translate into lower outflows via the financial account in the future. However, they may also complicate raising capi...
- Tatiana Orlova
Quarterly Lodestar
Together with other emerging economies, the three largest ex-USSR economies stand to benefit from the broad-based recovery that is under way worldwide. The commodity markets are in a much better shape than 2-3 years ago, and regional geopolitics seem calm in comparison with the 2014 storm. Still, we warn investors against complacency in 2018-2019. We note a recent rise in global geopolitical risks; in the CIS region, we see a risk of a flare-up in hostilities in Eastern Ukraine ahead of presiden...
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