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In the present-day conditions, if sanctions against Russia eliminate an opportunity for Russian borrowers to take new loans even a short-term period during which such sanctions are in force will deal a serious blow to the balance of capital flows.

On the threshold of the referendum in Crimea on Friday, stock market indices in Russia kept falling. Having started with a 2%–2.5% drop, two hours later after the beginning of the trading session they lost over 5%. The weighted average USD exchange rate at the unified trading session appreciated by 18.25 kopeks and amounted to Rb 36.639.
It is not the fact of Crimea's possible joining to Russia that affects the ruble exchange rate, but a threat of Western sanctions against Russia and a capital flight. It is to be noted that the effect of the capital outflow on the ruble exchange rate will be more dramatic that the sanctions alone. The outflow of capital will be substantial in terms of demand on and supply of the foreign currency. With taking into account the panic on the market, depreciation of the ruble will be a dramatic one.

However, things are not that bad. If future, the balance will return to normal provided that high oil prices prevail. If the capital flight stops, the opposite trend will start, that is, appreciation of the ruble.

With taking into account both the panic on financial markets and maintaining by the Central Bank of Russia of high interest rates, it is early to say whether the Russian economy faces a substantial recession. However, it is already clear that the economy will hardly achieve the expected indices by the end of the year. Maybe, there will be zero growth or an insignificant slump. However, it is to be repeated that nothing can be said definitely until the panic subsides.

Alexei Vedev, Head of the Structural Research Center

On February 11, the mass media reported that Andrei Klepach, Deputy Minister of Economic Development of the Russian Federation would leave his office to be appointed the Deputy Chairman of the Bank for Foreign Economic Affairs. In our view, Klepach's departure from the Ministry of Economic Development is highly predictable: in present conditions economic development forecasting is a difficult task. Balancing between real trends in economy and forecast declarations of the authorities is becoming more and more complicated.

The Ukranian crisis which began in the past few days has already caused a dramatic and volatile reaction on the stock and foreign exchange markets. What are the expectations and mood in the Russian industry now? How did the Ukrainian crisis affect (may affect) the real sector of the economy?

On March 3, 2014, the Central Bank of Russia raised the key interest rate from 5.5% to 7% per annum in order to protect the national currency.

The Federal Treasury began on February 20, 2014, according to the information available on the official website of the Ministry of Finance (Minfin) of Russia and the Federal Treasury, to conduct foreign exchange purchase transactions in the domestic foreign exchange market with a view to replenishing the Reserve Fund contribute with extra federal budget oil and gas revenues.

The Federal State Statistics Service (Rosstat) published on February 19, 2014 its data on the dynamics of the principal macroeconomic indicators in January 2014 year-over-year.

A few days ago the Ministry of Finance (Minfin) of Russia published its plans on the purchase of foreign exchange to replenish the Reserve Fund. The Minfin and Federal Treasury will buy fr om the Central Bank of Russia foreign exchange in an amount equivalent to Rb 3,5bn to able to collect Rb 212,2bn of extra federal budget oil and gas revenues for the Reserve Fund before the end of May 2014. The foreign exchange market has responded to the news with another crash in the ruble exchange rate.

The first data on bank reporting on the dynamics of households' deposits in January turned out to be disappointing.

The Ministry of Economic Development of Russia (MED) has prepared a draft law which cancels the mandatory corporate seal during registration of joint-stock companies (OAO stands for OJSC and ZAO stands for CJSC) and limited liability companies (ООО).

Net capital outflow from the non-public sector, according to the preliminary estimates of the Ministry of Economic Development of Russia (MED), reached $17bn in January 2014. In Q1 2014 the MED anticipates $35bn of total net capital outflow. While the January capital outflow equals in size to that in the same period of the previous year, the quarterly estimate is much higher than $28bn in Q1 2013.

On February 17, 2014 the Bank of Russia complimented its monetary policy toolkit with “fine tuning” operations designed to absorb liquidity. 

The Ministry of Economic Development of Russia (MEG) has found and presented to President Putin new sources of economic growth in Russia in 2014.

The average monthly ruble exchange rate, according to the Bank of Russia’s official data on January 2014, has dropped 1.7% against the US dollar and 1.6% against the euro. As a result of steady decline the Russian currency exchange rate has lost a bit more than 4.2% against the US dollar within three months, and 5% against the euro within four months.

At the end of January 2014 the Russian ruble has weakened 6.7% against the US dollar. However, the current ruble weakening is not large-scale.