New risk scenario the Central Bank may assume oil prices at $25 per barrel in 2016

New risk scenario the Central Bank may assume oil prices at $25 per barrel in 2016

MOSCOW, 12 February. A new risk scenario, the CBR may come from oil prices to $25 per barrel in 2016 and from $35 per barrel in 2017-2018. this was reported to journalists by the first Deputy Chairman of the Central Bank of Russia Dmitry Tulin. He said that while work on the updated script is that it will be presented on March 18.

“The difference is quite significant”

“If I remember correctly, the $25 per barrel in 2016. average annual respectively, and $35 per barrel in the next two years,” he said.

Now we are revising our forecasts. Must proceed from the fact that low oil prices can be long. They put additional inflationary pressure

Elvira Nabiullina
the head of the Central Bank of the Russian Federation

In the baseline scenario the oil price to $35 per barrel this year and $45 in 2017-2018, said the first Deputy Chairman of the Central Bank.

“The difference is quite significant,” said Thulin.

Earlier, the Central Bank of the Russian Federation said that the current risk scenario assumes oil prices around $ 35/bbl, a decline in GDP of 2-3%, inflation is about 7%.

The price of oil Brent following the results of 2015 fell by 49.6% since the beginning of 2016 fell 16% to $ 31/bbl, Atanov the ruble.

The dollar from the beginning of 2016 increased by 8% to 79.5 rubles, Euro – by 12% to 90 rubles.

Expert opinion

Author: Konstantin KORISHCHENKO

“Influence has waned”

According to Tulin, the influence of ruble depreciation on inflation is reduced.

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“We are confident that the impact of exchange rate fluctuations continue to adversely affect inflation expectations and actual inflation, but the impact of this factor still decreased compared with the period a year ago,” he said, adding that the reduction effect occurred due to the decrease in solvent demand of the population and excessive demand for consumer goods.

“The impact is, but it has weakened,” said Thulin.

The fall of the ruble began in the second half of 2014, while from June to December, the Russian currency has fallen against the dollar by 2.2 times. Then in 2015 amid falling oil prices, the ruble fell against the dollar by 31%, to Euro – by 17%. Since the beginning of this year, the dollar rose against the ruble by another 8% to 79,5 roubles and Euro – by 12% to 90 rubles.

In January 2016, inflation in Russia slowed to 9.8% after 12.9% in December 2015 as a factor in the sharp deceleration of annual inflation in January the Central Bank of the Russian Federation calls the high base effect in early 2015, the prices skyrocketed. As stated in the analytical comments of the CBR, inflation is not affected even the ruble, and the citizens were in no hurry to stock up for future use non-food durable goods.

Tulin also stressed that the high dollarization of Bank balance sheets increases the volatility of the ruble.

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“The high level of dollarization of the banking sector is an independent factor that increases the volatility of the ruble”, – he said.

“In addition to the movement in oil prices, and not due to the fact that commercial banks are trying to “speculate”, that is, they do not even open foreign currency position, but simply due to the fact that they have a large volume of accumulated credit requirements in dollars, they periodically encounter the need to convert this structure. That is, when a part of the liabilities is translated from roubles into dollars, (the banks) there is a need to buy or sell currency in the market. And this destabilizes the exchange rate,” he explained.

On Thursday the head of the CBR Elvira Nabiullina reported that the Bank of Russia intends to reduce the level of valorisatie Bank balance sheets.

“A Pyrrhic victory”

Waste of international reserves will not be able to solve the problem of stabilization of the ruble if the Central Bank does not have “astronomical” reserves, also said Tulin.

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“No amount of spending foreign exchange reserves can not solve the problem of stabilization of the ruble. Because for a long time of reserves for these purposes is not enough, no one, no country in the world, no monetary authorities. If the cartridges do not produce continuously, it is possible to shoot available Arsenal very easily and quickly”, – said the first Deputy Chairman of the Central Bank.

According to him, a waste of reserves is “a Pyrrhic victory”, “and then everything will return to its previous status, only the reserves will be gone”.

Tulin also said that the Bank of Russia reserves the right to conduct foreign exchange intervention in case of threat to financial stability.

“What the economy is and the exchange rate”, – he added, stressing that the only right method of stabilization policy is to diversify the economy, overcome the “shameful and disgraceful dependence on commodity prices”.

“If some of the astronomical figures of foreign exchange reserves and no place to put them, then you can, of course, some time to practice, but it is in theory why this is. We have no astronomical (stocks)”, said Tulin.

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The need to launch extended trading on the currency market yet, also said Tulin.

“There is no need in this. It is a backup tool that we will have in its Arsenal, but the relevance of it is not yet too high. Technical problems there,” he said, noting that the liquidity of the currency market high, “there are buyers and sellers, the exchange rate is formed on the basis of a sufficiently broad, deep market”.

Moscow exchange earlier in January announced the development of technology discrete auction for the currency market. This mechanism is similar to that implemented in the stock market. Discrete auction is a suspension of trading in case of sharp fluctuations of currencies and is designed to smooth out such fluctuations.

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