RUB continued underperforming EM FX
Yesterday, RUB weakened 0.6% against USD (32.96) and 0.4% vs. BASKET (38.15). In the morning, RUB opened on a stronger footing thanks to the quite decent selling flow from exporters. However, as soon as supply abated RUB started slipping, while the rest of the EM FX spectrum traded flat or a little stronger yesterday. In the second half of the session, RUB’s depreciation intensified as we think some market participants were covering shorts in USDRUB and BASKET. Thus, it took just a couple of hours for BASKET to climb from 38.05 to 38.23 in a rather sharp move. The same applies to USDRUB, which surged from 32.85 to 33.03. Overall, our estimates show that RUB trades 1.0-1.5% weaker relative to the EM FX index. Consequently, RUB’s outperformance since May has almost faded out as well. Yesterday, RUB traded more in line with NOK, which lost 0.7% to USD. At the same time, the current level of oil prices (Brent closed near USD 112/bbl yesterday) is rather comfortable for RUB from the perspective of the current account. Nevertheless, we think RUB would regain its stronger footing in December, as investors might start preparing for the usual seasonal rally in 1Q14.
Maxim Korovin, Anton Nikitin
VTB Capital analysts
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