Summary:
- Ruble depreciation attributed to declining oil prices – budget deficits and tight liquidity may possibly prevent acceleration of depreciation
- PPI has increased significantly over the past month signaling a build up of inflationary pressure.
From... Troika Dialogue Russia Market Daily:
Headline: Ruble Depreciation May Half as Excessive Free Liquidity Evaporates
- Recent ruble depreciation triggered by declining oil prices
- The increase exchange rate sensitivity to oil prices is connected to the ruble liquidity injection through budget channels
- Budget ran a significant deficit in June, banking accumulated more than R1.1T in deposits
- Since banking system is demonstrating increased demand for rubles, and oil prices are increasing, ruble is not expected to fall dramatically
From... Business New Europe Daily News Letter:
Headline: PPI Hits 2.2% in June
- PPI Growth points to a build up of inflationary pressure – producer prices increased by 2.2% MoM – significantly over the 1.3 MoM estimate
- Suggests that the inflationary pressures have stared to build up
- CPI rate has lagged behind closing at 7.4% YTD
- Oil and Gas prices push PPI up – wholesale prices rose 14.3%
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