Yesterday, RUB gained about 0.5% vs. both BASKET (37.82) and USD (32.97), trading on a stronger footing right from the morning. Overall, RUB moved in line with the rest of the EM FX spectrum, but outperformed many of them at the same time. Thus, only BRL saw higher gains (0.8%) vs. USD than RUB. Commodity-based currencies like NOK, AUD and NZD ended stronger as well, even though Brent crude oil was down 1.6% yesterday to USD 111.4/bbl. However, as we have already argued, short-term swings in the oil market spurred by concerns over Syria have little impact on RUB. Meanwhile, easing over the prospects of direct military action in Syria fuelled an improvement in risk sentiment yesterday.
Overall, yesterday’s strong RUB performance was in line with our expectations and we still think that BASKET might touch 37.50 unless, for instance, some negative turnaround in the Syrian story spoils risk sentiment again. We also highlight that, quite expectedly, there was no negative reaction on the FX market to news about a cut in the volume of unplanned interventions.
Maxim Korovin, Anton Nikitin
VTB Capital analyst
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