Why Putin is unlikely to insist on immediate lifting of sanctions

Research shows that if the United States will weaken the sanctions, the ruble will grow by 5-10%.

Trump and Putin during the first conversation did not discuss sanctions.

Most likely, President Vladimir Putin will not rush to discuss the subject of sanctions with Donald trump.

Sanctions in 2014, prevent the development of the economy, but they are somewhat eased the pressure on the ruble exchange rate is last year strengthened on the background of stabilization of oil prices. If the United States will weaken the sanctions, the ruble will grow by 5-10%, what according to most economists surveyed by Bloomberg. While 41% of respondents predict directional growth of 1-5%.

Shocking victory for trump in the election has already spawned rumors that it will weaken us pressure on the Russian economy, and this will attract even more capital to the Russian currency, which all of last year dearly loved investors. Since exchange rate changes would weaken the competitiveness of domestic producers, the authorities in Moscow last week began to action, making the plan to resume purchasing foreign currency in order to provide greater predictability of the ruble.

“Russian leaders are not very happy with the strengthening of the ruble and will intervene for sure, — said Vadim Bit-avragim, a portfolio Manager working in Moscow “the Management company “Kapital”. — Look at their reaction to today’s ruble exchange rate. Of course they will not admit its excessive strengthening”.

The question of American sanctions imposed over the Ukrainian crisis, was not raised during a meeting on Saturday of the first telephone conversation between trump and Putin, said the Kremlin press-Secretary Dmitry Peskov. The American President had previously stated that may consider the issue of recognition of Russian Crimea, and to lift the sanctions.

What are the sanctions

Part of the punitive measures is limited by the ban on arrival in the United States and freezing of accounts of those people who the United States believes was involved in the Ukrainian crisis. But the biggest damage to the Russian economy caused measures to limit access to foreign capital markets. Such access has lost the largest Russian companies, starting with the oil giant “Rosneft” and ending with the largest credit institution Sberbank.

After a record fall in January last year, the Russian currency has demonstrated the world’s highest lift. Best year was 2016, when the ruble rose by 20% against the dollar. In 2017, the ruble has appreciated by about two percent. Monday at 11 o’clock 37 minutes in Moscow, the dollar gave 60,1150 of the ruble, and it was a depreciation of 0.3%.

As reported by Bank of America, the ruble “will surely benefit most of all” if the United States will weaken the action of the pressure of sanctions, and the dollar may drop to 55-57 rubles. It’s almost the same level, which, as stated in this month, the Minister of industry Denis Manturov, may endanger the competitiveness of Russian producers on foreign markets.

The wave of interventions?

Due to the weakening of sanctions, the ruble may “exceed their baselines” and its exchange rate against the dollar in this case fall below 50, as reported by Societe Generale. “In this case, the Central Bank will be forced to deal with the tendency of increase due to foreign exchange interventions, accumulating dollars with the aim of preventing risks to financial stability”. This point of view in a research note expressed Societe Generale analysts Yury Tulinov and Evgeny Koshelev.

These interventions will act in addition to the family, which last week announced the Ministry of Finance. It intends to negotiate with the Bank about the purchase on his behalf in foreign currency in the month of February, when the price of oil Urals has risen above the budgeted current year $ 40. According to the Ministry’s estimates, if the average price of oil set at $ 50 per barrel, it will receive about one trillion rubles of additional revenue (that’s $ 16.6 billion dollars).

“Further strengthening of the ruble will meet increasing resistance from exporters and the state”, — said Sergey Narkevich, working as an analyst in Moscow “PSB”.