The rouble real effective exchange rate appreciated 1.5% MoM in December, strengthening from a zero monthly increase in November and bringing the FY12 change to +2.4% YoY. In real terms, RUB strengthened 3.2% MoM against USD (-2.7% YoY in 2012) and 0.6% MoM against EUR (+5.0% YoY in 2012).
RUB REER appreciation in December was partly a result of the nominal rouble strengthening during the month (2.2% MoM against USD, according to official average rates). Since January 2008, RUB REER has gained 15.4%. For 2012 as a whole, RUB has appreciated just 2.4% in real terms, its lowest appreciation for years (excluding the crisis-hit 2009). As we expect terms of trade to be stable to worsening in 2013 and after, we anticipate the pace of RUB appreciation slowing further to 1.0-1.5% a year. That will depend heavily on the expected growth of productivity in Russia’s economy.
Maxim Oreshkin, Daria Isakova
VTB Capital analyst
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