Yesterday, RUB opened in line with the general risk-off mode in the morning and touched 41.15 vs. BASKET. USDRUB moved to 35.40 at the top. However, the sell-off was not long-term and RUB gradually moved to 40.70 vs. BASKET and 35.15 vs. USD. Exchange turnover was around USD 6bn on MICEX, a bit below average for the last few days. In addition to EMFX moves (that generally consolidated in recent days), RUB benefited from the Ministry of Finance’s announcement that no FX purchases will be made in the open market, while the CBR is offering FX every day. In our view, at these levels, the regulators are concerned about RUB stability and not creating further downside expectations. To recap, the Ministry of Finance announced that the transfer to the Reserve Fund would be RUB 207bn (before 1 April) and this has been an implied downside risk factor for RUB lately (however, the market has discounted its possibility at these RUB levels, in our view).
However, the news is certainly a positive local spin for RUB as EMFX sentiment improves and most negative factors for RUB are already in price. Moreover, the market positioning is over-stretched to long hard currency, in our view, especially, on a non-resident investor side. At the same time, RUB trades only 1% above the 200/400mn-intervention threshold that could serve as the first stop for the market if the move in EMFX continues on the upside tomorrow.