Along with most of the world, Russia’s economic future is a bit uncertain, especially as it tries to develop markets outside of commodities such as oil. Recent bouts with inflation and Mother Nature have kept investors in Russia’s exchange traded funds (ETFs) on their toes.
According to Tony Vorobyova of Reuters, Russia has been suffering from the worst heat wave on record. As a result, crops have been devastated, leading to worries about inflation.
Russia’s grain crop is forecast at 60 million metric tons, down from 97.1 million metric tons last year, and wheat prices rose as high as 9% last week.
So far, inflation has been modest, and Russia’s Central Bank is unlikely to raise interest rates, report Maria Levitov and Halia Pavliva of Bloomberg.
“As inflation risks linked to wheat price growth are not monetary- driven, we do not think that they can be mitigated by the Central Bank of Russia’s interest rate policy.”