The Russian ruble is likely to weaken in the face of rapidly rising imports and capital fleeing the country, analysts said on Tuesday.
Russia lost $31.2 billion in capital outflow in the first half of the year, as investors ran for safe havens ahead of parliamentary elections in December and presidential polls in March. The central bank expects a total of $35 billion to leave the country this year.
Exports increased in January-August by 32 percent year-on-year, while imports jumped 40 percent.
"The only reasonable way to restrain the worsening trade account is the ruble's weakening, trivial as it may seem," Dmitry Belousov from the Center for Macroeconomic Analysis and Sort-term Forecasting (CMASF) said.
"The balance of payments is becoming a point of instability. Our economy follows the trade balance. Investors just look at the worsening trade balance and start withdrawing capital."
Russian exports will grow slowly even if prices for oil, its key export, grow. Imports, mainly purchases of equipment, will continue rising at a quicker speed, Belousov also said.
On Monday, the ruble hit a ten-month low to the dollar and kept falling on Tuesday, hitting 31.50 rubles per dollar and 42.90 rubles per euro.
VTB Capital investment bank linked the ruble weakening to capital outflow.
"The gyrations in the local forex and money markets have been by far the most disturbing feature of the last two trading days," VTB Capital said in a research note.
"The combination of a surge in rates and a weaker ruble is unnatural (we would expect banks to be natural sellers of forex if faced with a ruble liquidity shortage) and, hence, is indicative of price-insensitive capital outflows."
Yelena Abramova, CMASF's general director, said the rate was unlikely to return to the 27-28 rubles per dollar level.
Finance Minister Alexei Kudrin has said the ruble would weaken gradually in 2011 following the falling current account surplus, while Deputy Economic Development Minister Andrei Klepach said last week that the ruble was overvalued by 10 percent, adding he expected a sharp devaluation.
