Balance of payments

► In fact, the core balance turned into a 3-month average of $574 million surplus, up from $39 million deficit. The rest depends on energy demand and energy prices, and isn’t policy-elastic anyway.

► In July the financial account posted $1.2 billion inflows after a $4.5 billion outflow in June. The CAD itself is USD 1.8 billion; so, the financial account couldn’t cover the current account deficit. However, net errors and omissions brought in $3 billion. The end result is the CBRT reserves went up by $2.4 billion. Well, net errors have such a habit: they come to the rescue whenever they are needed.

► The current account deficit has begun to narrow. In May it was $58.27 billion. In July it stood at $54.56 billion, falling for the second consecutive month. There is more to come as domestic demand slows down automatically. A $5051 billion CAD by the end of the year is in the cards. Furthermore, barring any oil price shock of a large magnitude, in 2019 it may fall all the way down to below $45 billion.

► No need to talk more about the current account. The core deficit, i.e. non-energy non-gold, has already fallen by $2.9 billion in a single month to $4.4 billion in July, indicative of domestic demand contraction, and the August data is yet to be revealed. We will see the exchange rate effect in both August and September. The deficit adjusts itself.

The poor performance of FDIs continue. Out of $707 million FDI, $400 came from real estate. I don’t know what to do with this datum. Whether it is sustainable I can’t guess. Portfolio investments recorded an outflow of $270 million. Non-residents sold equities ($463 million) and debt securities ($68 million). There were also net Eurobond payments ($153 million). No news there, but we knew that already, no?

Deposits rose, and not only deposits with correspondent banks behaved so but also nonresidents’ deposits held locally. Let’s see what happens (happened) next.