CB: positive for the Russian market from the fed’s decision more than threats

CB: positive for the Russian market from the fed’s decision more than threats


After the fed’s decision to raise rates, the main risk for Russia is that investors may begin to withdraw from emerging markets, says the first Deputy Chairman of the CBR Sergey Shvetsov.

MOSCOW, 17 Dec. Positive for the Russian market from the fed rate hike more than potential threats, said the first Deputy Chairman of the CBR Sergey Shvetsov.

On Wednesday, the fed at the end of another meeting raised the benchmark interest rate to 0.25 to 0.5%. As stated by the head of the regulator Janet Yellen, the fed plans to increase the base rate to 1.5% in 2016 and 2.5% in 2017, but it will depend on the economic situation.

According to Shvetsova, after the decision of the fed is the main risk for Russia is that investors may begin to withdraw from emerging markets, which include including the Russian market, the tools developed markets. “Although one percent a little, but sometimes that’s enough to take the decision to discontinue investing in more risky yields and to return to tools with a lower degree of risk”, — he said.

However, from the point of view of capital outflows Russia is in a better position, says Shvetsov. “The Russian market has a lot of things leaked, so we may be in a better position than our colleagues, the question is still in the extension of credit spreads”, he said.

According to first Deputy Chairman of the Central Bank, currently Russian CDS is at the level of borrowers who also export energy resources. “There is inherent risk dynamics of the balance of payments, the dynamics of budget revenues, plus the added need to comprehend how these spreads will change, as there will be added risks of capital outflow from emerging markets in favor of developed ones,” he added.

At the same time, according to Shvetsova, the fed’s decision will be meaningful, “active rate increase, rather than creating an inflated expectation of its growth”. “From this point of view, the market will be more stable, because since the end of 2013, when Bernanke (former head of the fed — ed) announced the tapering of quantitative easing and Yellen began to hint at the beginning of the improvement cycle, it’s already happened… the Market calms down,” — said Shvetsov.