SOVEREIGN ECONOMY: TOP EVENTS OF THE WEEK
The ruble continues to decline against the euro and the US dollar. The euro rose above 107 rubles on the Moscow Exchange, for the first time since March 25, 2022, while the dollar traded towards 98 rubles. On Wednesday morning, the euro rate amounted to 107.0575 rubs./EUR1, while the US dollar was priced at 97.42 rub./$1. The value of the currency basket ($0.55 and EUR0.45) increased by 44.6 kopecks - up to 101.76 rubs.
The head of the Ministry of Agriculture of Russia, Dmitry Patrushev, predicts an increase in food inflation. According to the minister, main reason is in the rise in grain prices. However, in relation to Russia, there are other factors besides this. It reflects the overall trend of accelerating consumer inflation associated with sanction pressure, economic imbalance, and ruble devaluation.
United Shipbuilding Corporation (USC) is being transferred to VTB for a 5-year trust management. USC has been heavily affected by sanction restrictions and has significantly reduced ship production. USC's loss for 2022 amounted to about 20 billion rubles. This compels the Kremlin to shift the burden of supporting the state company onto a state-owned commercial bank (with the state owning 60.9% of VTB shares).
Mortgage rates are rising in the Russian Federation. Sberbank has announced an increase of 0.8 percentage points in the rates of its basic mortgage programs. This is a direct consequence of the decision made by the Bank of Russia to raise the key rate by 100 basis points to 8.5% per annum, effective from July 21. In such a situation, an increase in loan rates, including mortgage rates, is inevitable.
Mishustin has included cedar nuts in the strategically important goods and resources list. The main goal of these changes is to create conditions for processing all harvested cedar nuts within the country. At the same time, an artificial reduction in the export of cedar nuts will highly affect Chinese processors (81% of the physical volume of nut exports had to go to China).