26 Mar 2014
EMEA EM Express: Ukraine waiting for IMF loan decision, raises gas prices
FXStreet (Łódź) - On Tuesday Ukrainian Finance Minister Alexandr Schlapak said that IMF inspectors, who had ended their three week mission to the country, would communicate their findings today. Kiev hopes for a US$15-20bn loan, which would help it avoid default.
Schlapak also signaled that Ukraine´s economy could experience a 3% recession this year, after seeing zero growth in 2013, while the budget shortfall could reach 4.8% GDP.
In the opinion of Dmitry Polevoy, Chief Economist at ING, despite Kiev´s commitment to reforms, considerable risks for the socio-economic outlook remain. The economist points to the “ tougher stance of the official Kiev towards radical nationalists”, “the first resignation in the new government”, “ongoing preparations for the 25 May presidential elections with no unite candidate from the ruling camp, no clarity on the timing of Parliamentary elections and continuing tensions in eastern Ukraine against the new government in Kiev”, as the major risk factors.
Polevoy also reminds that Russia could exert pressure on Kiev by raising prices of gas or by refusing to supply it and by disrupting imports from Ukraine. The country´s national oil and gas monopoly Naftogaz has already announced on Wednesday that gas prices would go up by 50
50% from May 1 and that more increases were planned until 2018.
“Almost everything that happens in Ukraine is about natural gas,” Adam Button from Forex Live observes. “Subsidizing prices eats up a massive part of the government budget and making enemies with Russia is only going to make it worse.”
Meanwhile, Russia´s already fragile economic situation could deteriorate further due to the Crimea crisis, the World Bank said today. The country´s economy could contract by 1.8% this year in case of an escalation of the conflict with Ukraine, and the 4-5% inflation target will most probably be missed. The World Bank sees Russia´s central bank spending $38.9B in Q1 on supporting the rouble. Capital outflows could reach 100-150 billion dollars this year.
As Jamie Coleman points out on FXBeat: “If Russia goes down the tubes economically it risks weakening European banks with Russian exposures and reignites the European debt crisis...That is one reason why Europe is treading so lightly as far as sanctions are concerned...”
On a positive note, Polish PM Donald Tusk said on Wednesday that the sanctions which the EU and US imposed on Russia so far seem to be having the desired effect and should imprede further aggression against Ukraine. President Barack Obama, speaking at the EU summit in Brussels later on Wednesday, assured that the US and Europe were united in their support for Ukraine and that further sanctions against Russia were discussed.
Economic data
The mood of Turkish consumers and businesses improved in March, the Central Bank of the Republic of Turkey revealed on Tuesday. Manufacturing Confidence came at 108.6 in March, up from 104.6 in February.
Turkish capacity utilization declined to 73.1 points in March, following 73.3% recorded the previous month.
The Slovak Republic released the current account balance data, according to which the country´s deficit of €-353M in January shifted to a €1M surplus in February.
Technicals
USD/RUB fell by 0.17% on Tuesday to 35.42. The daily USD/RUB FXStreet Trend Index was slightly bearish and the OB/OS Index neutral. RSI was neutral at 40.5774 at the last close. Daily 2-StDev Volatility Bandwidth was shrinking at 2357 pips, with ATR (14) expanding at 3975 pips. The 1D 200 SMA was at 33.3760, while the 1D 20 EMA was seen at 36.0564.
USD-PLN fell slightly to 3.02. The daily USD/PLN FXStreet Trend Index was slightly bearish and the OB/OS Index neutral. RSI was neutral at 46.4159 at the last close. Daily 2-StDev Volatility Bandwidth was shrinking at 143 pips, with ATR (14) shrinking at 266 pips. The 1D 200 SMA was at 3.1199, while the 1D 20 EMA was at 3.0399.
Schlapak also signaled that Ukraine´s economy could experience a 3% recession this year, after seeing zero growth in 2013, while the budget shortfall could reach 4.8% GDP.
In the opinion of Dmitry Polevoy, Chief Economist at ING, despite Kiev´s commitment to reforms, considerable risks for the socio-economic outlook remain. The economist points to the “ tougher stance of the official Kiev towards radical nationalists”, “the first resignation in the new government”, “ongoing preparations for the 25 May presidential elections with no unite candidate from the ruling camp, no clarity on the timing of Parliamentary elections and continuing tensions in eastern Ukraine against the new government in Kiev”, as the major risk factors.
Polevoy also reminds that Russia could exert pressure on Kiev by raising prices of gas or by refusing to supply it and by disrupting imports from Ukraine. The country´s national oil and gas monopoly Naftogaz has already announced on Wednesday that gas prices would go up by 50
50% from May 1 and that more increases were planned until 2018.
“Almost everything that happens in Ukraine is about natural gas,” Adam Button from Forex Live observes. “Subsidizing prices eats up a massive part of the government budget and making enemies with Russia is only going to make it worse.”
Meanwhile, Russia´s already fragile economic situation could deteriorate further due to the Crimea crisis, the World Bank said today. The country´s economy could contract by 1.8% this year in case of an escalation of the conflict with Ukraine, and the 4-5% inflation target will most probably be missed. The World Bank sees Russia´s central bank spending $38.9B in Q1 on supporting the rouble. Capital outflows could reach 100-150 billion dollars this year.
As Jamie Coleman points out on FXBeat: “If Russia goes down the tubes economically it risks weakening European banks with Russian exposures and reignites the European debt crisis...That is one reason why Europe is treading so lightly as far as sanctions are concerned...”
On a positive note, Polish PM Donald Tusk said on Wednesday that the sanctions which the EU and US imposed on Russia so far seem to be having the desired effect and should imprede further aggression against Ukraine. President Barack Obama, speaking at the EU summit in Brussels later on Wednesday, assured that the US and Europe were united in their support for Ukraine and that further sanctions against Russia were discussed.
Economic data
The mood of Turkish consumers and businesses improved in March, the Central Bank of the Republic of Turkey revealed on Tuesday. Manufacturing Confidence came at 108.6 in March, up from 104.6 in February.
Turkish capacity utilization declined to 73.1 points in March, following 73.3% recorded the previous month.
The Slovak Republic released the current account balance data, according to which the country´s deficit of €-353M in January shifted to a €1M surplus in February.
Technicals
USD/RUB fell by 0.17% on Tuesday to 35.42. The daily USD/RUB FXStreet Trend Index was slightly bearish and the OB/OS Index neutral. RSI was neutral at 40.5774 at the last close. Daily 2-StDev Volatility Bandwidth was shrinking at 2357 pips, with ATR (14) expanding at 3975 pips. The 1D 200 SMA was at 33.3760, while the 1D 20 EMA was seen at 36.0564.
USD-PLN fell slightly to 3.02. The daily USD/PLN FXStreet Trend Index was slightly bearish and the OB/OS Index neutral. RSI was neutral at 46.4159 at the last close. Daily 2-StDev Volatility Bandwidth was shrinking at 143 pips, with ATR (14) shrinking at 266 pips. The 1D 200 SMA was at 3.1199, while the 1D 20 EMA was at 3.0399.