As Syria concerns have been contained for some time now, EM have been on the screens and risk-on mood has persisted. It seems that QE tapering concerns have been more than priced into market valuations and valuations look cheap. Moreover, the RUB dynamics were not unexpected, because we have shown several times that market participants have been mostly ‘long’ hard-currency, and have therefore been easily stopped out on the RUB’s way up. RUB closed at 32.80 vs. USD and 37.70 vs. BASKET; however, the intra-day low was 0.5% lower. Moreover, RUB did better than EM peers, outperforming their index 0.2–0.4%. At these levels, we are less comfortable with the rapid RUB appreciation, because positioning is less skewed toward long hard currency: oil prices declined by 3–4% in the last trading session and EM peers are already 5% off their peaks. Thus, we still expect that our target of 37.50 will be reached in the coming weeks, most probably closer to the tax period.
The CBR released the data about its FX interventions on 9 September, showing that the RUB-equivalent of interventions was 6.27bn. At the average USDRUB of 33.29 during the intervention time, this means that daily interventions were USD 190mn instead of USD 200mn. Hence, we expect that the CBR reduced the volume of daily interventions (together with the non-target threshold to USD 400mn) by 5–10% in respective corridors, if this data is consistent. As such, this change in intervention volume looks to be minor and the main outcome from the CBR’s action on the market is that the risk of band widening is no longer valid for a few months ahead. Moreover, we do not rule out that this step is just the first in a series of further adjustments in intervention volumes in order to make the band more flexible.