RUB: trending higher; ECB decision had short-term impact
Positive FX market action continued, as RUB opened at 34.70 vs. USD and at 40.20 vs. BASKET, in line with EM currencies. RUB weakened immediately after the ECB decision to leave rates unchanged: this triggered a EUR move above 1.36, and a short-term RUB move to 40.40, before a further reversal to 40.28 by the end of the day. Meanwhile, RUB remains 2.5% behind the EM FX crowd and a further reversal in risk sentiment is likely. This is especially likely given that non-resident positions in hard-currency vs. RUB have not yet been cut, in our view.
Maxim Korovin, Anton Nikitin
VTB Capital analyst
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