OREANDA-NEWS. October 08, 2010. CBR released its initial estimates for 9M10 balance of payments. The USD 60.9bn current account surplus implies that the CA shrank from USD 18.7bn in 2Q10 to USD 8.7bn in 3Q10. On the capital account, the private capital inflow of USD 3.1bn in 2Q10 turned into a USD 4.2bn outflow, reported the press-centre of OTKRITIE Financial Corporation.

View: Despite the decline in the surplus, we believe that the Russian current account is strong enough to provide CBR with flexibility in exchange rate management. Nevertheless, we are concerned with the decline in the CA surplus as it is primarily driven by the acceleration of imports of goods to 39% YoY in the 3Q10. However, we still need to see whether this includes a one-off deflection, or if it is sustained through September and October. Another factor that limited the surplus was the seasonal spike in service imports due to the vacation season. On the exports side, in the current stable oil price environment volumes are steady for fourth consecutive quarter. But the mix is somewhat positive, with the share of fuel declining from 64% to 61%.

While the USD 4.2bn private capital outflow is quite insignificant for Russia, it is the reflection of two trends. Firstly, banks were importing capital by increasing their foreign liabilities by USD 14.1bn (the rise in assets was much smaller, at USD 5.9bn). Secondly, companies were net capital exporters of USD 12.4bn, mostly through a USD 14.9bn increase in foreign assets, which is a sign of a lack of local confidence in domestic stock market performance.