Russia's trade balance declines

Import and export data released yesterday showed that the Russian trade balance for August decreased to 8.7 USD bln (10.7 USD bln July). The decline is largely due to a fall in exports. Of itself the decline in the trade balance is unlikely to set alarm bells ringing because Russian balance of payments record a healthy surplus and as such Russia is far removed from the difficulties faced by the fragile five. 

In the meantime the oil price has also risen somewhat, so the large decline should not be repeated in the September data. Although RUB performed well in recent weeks, largely because of improving EM risk sentiment and an increase in the oil price. 

"These gains are unlikely to be sustained over the longer term. Real rates remain decidedly negative and a still elevated inflation profile means this is unlikely to change anytime soon", says Commerzbank.