OREANDA-NEWS. September 28, 2010. CBR Chairman Sergey Ignatyev said that the current account surplus reached USD58bn in 8M10 in his report to the Duma. However, he also mentioned that the average monthly current account surplus during June – August dropped to USD 2.8bn/month. He also said CBR expects inflation at 8% level for FY10, reported the press-centre of OTKRITIE Financial Corporation.

View: The decline in monthly current account surplus is primarily driven by non-trade outflows on the current account, such as interest or dividend payment, whereas trade surplus remains strong at around USD 11 bn a month.

However, we view these trends as temporary and believe that for the full year of 2010 Russia will post a strong current account surplus of USD 85bn (CBR itself forecasts a surplus of USD 74bn). Furthermore, we expect CBR to support ruble appreciation as a means of addressing the issue of mounting inflation which according to our forecast should reach 9.2% by year’s end. Even though CBR has stated that it will address interest rates once again in its 28 September meeting, we believe that no action will be taken as the current acceleration in inflation has primarily non-monetary origins. Consequently, in such conditions interest rate moves will not be of much help, in our opinion.