Closed borders, a sharp rise in gas prices and a rally in industrial metals have created a “miracle” for the balance of payments of the Russian economy.
The net inflow of foreign currency into the country beats long-term records, despite the fact that the main source of export income – the export of crude oil – remains significantly below pre-crisis levels, follows from the data of the Central Bank.
At the end of May, the Russian economy received $ 7.7 billion in the form of a surplus of the balance of payments – this is the amount the central bank estimated the difference between the main foreign exchange flows to and from the country.
In five months, this conditional “foreign exchange profit” of the economy reached $ 35.8 billion, of which $ 19 billion came in two months of the second quarter.
This year, the traditional seasonality of currency flows was violated, said Stanislav Murashov, an analyst at Raiffeisenbank.
Usually, the economy receives the maximum amount of dollars and euros in the first quarter, when the demand for Russian energy resources is highest. From the end of spring and summer, the balance is reversed: export earnings are declining, and currency outflows are increasing due to the holiday season and the conversion of dividends.
But in 2021, despite the fact that oil revenues remain 10% below pre-crisis levels, in April and May the economy received a “foreign exchange gain” for a record amount since 2011 (for the second quarter).
The reason is the active growth in exports, which is associated not only with the rebound in oil prices, Murashov points out. As follows from the statistics of the FCS, the “dollar rain” over the economy is being shed by Gazprom and metallurgists. Thus, revenues from gas exports in January-April jumped 49% to $ 13 billion; the export of flat products and unalloyed steel brought in 72% more than a year earlier ($ 1.72 billion).
Exports of semi-finished iron products jumped 28% in value terms to $ 2.43 billion; aluminum – by 35.5%, to 1.56 billion.
At the same time, restrictions remain in terms of international tourism, which “washed out” about $ 30 billion from the country annually, Murashov notes. Closed borders allow this currency to be left in Russia.
A fly in the ointment, however, is still high capital outflow by the private sector, notes ING economist Dmitry Dolgin. In May, according to the Central Bank, $ 5.9 billion left Russia in the form of an outflow – that is, three quarters of the net inflow of foreign exchange, and from the beginning of the year – $ 24.6 billion.
Strong balance of payments figures mean that “the music for the ruble will play for a while,” Dolgin says. Since November lows, the Russian currency has strengthened by 10% against the dollar, the rate of which returned to the lows in 10 months.
Nevertheless, Dolgin warns, the coming months will bring a traditional dividend capital outflow: foreign shareholders will convert payments from Russian companies into foreign currency, and this will put pressure on the ruble.
These transactions will peak in June ($ 1.9 billion) and July ($ 2.2 billion), he estimates.