Rising current account surplus facilitates FX accumulation by CBR

Russia's current account surplus is rising. It reached $48bn in H1 15, $10bn higher than the surplus in H1 14. The reallocation of errors and omissions in Q1 suggests that Q2 may be further upgraded in a similar manner as errors and omissions were very high. The surplus in Q2 15 at $19.bn was considerably higher than consensus ($13.5bn). In addition, the Central Bank of Russia (CBR) improved its estimate of the surplus for Q1 15 by $5.5bn to $28.9bn, notes Barclays.

"Due to the rise in the current account surplus so far in 2015, we are revising our forecast for 2015 up to $89bn. This is based on an average oil price of $61 in 2015 and average RUB exchange rate of 58/$. The surplus is expected to increase in 2016 to $95bn as oil prices are expected to average $68 with an average RUB exchange rate of 63/$," according to Barclays.

The CBR began accumulating reserves in mid-March and so far has bought almost $8bn. The higher current account surplus appears to provide more space for FX accumulation by the CBR.

Barclays says, "Private sector outflows are likely to be $88bn in 2015, down from $154bn in 2014, leading to almost no change in CBR reserves during 2015. Since reserves are currently down about $25bn, this implies FX reserve accumulation by the CBR in H2 15. For 2016, we expect outflows of $58bn and reserve accumulation of about $30bn."