The rouble exchange rate recovered notably from its drop in March. However, economists at Commerzbank expect the rouble to trend back lower as we could be witnessing the peak of the current-account balance.

Absence of capital flows will drive the current-account gap towards closure

“Preliminary estimates suggest that the current-account surplus widened by five-fold for the month of April. This gap will fluctuate in future, not only because the oil price will fluctuate, but because the EU and other countries may begin to implement a reduction of Russian oil imports; by 2023, natural gas revenues are likely to take a hit too. Meanwhile, the import restrictions are likely to remain in place.”

“We could be witnessing the peak of the current-account balance during the early stages of the conflict.”

“In the longer-term, the absence of capital flows will drive the current-account gap towards closure (in equilibrium, they have to be equal and opposite). Since we are starting from a favourable current-account position now, the tendency for the exchange rate in the longer-term will also be to weaken.”