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RUB: in line with EM FX

Yesterday, RUB lost 0.4% to USD (35.78), yet closed only 0.07% weaker vs. BASKET (41.72). However, we highlight that to a large extent RUB’s weakening was just technical: on Wednesday, EM FX slipped visibly late in the night, when RUB trading had already stopped. Thus, yesterday morning USDRUB opened with a gap at 35.85, while BASKET trading started at 41.90 reflecting EM FX weakness. Hence, compared with the opening levels, RUB firmed 0.4% against BASKET and about 0.2% to USD, which was in line with the average performance in the EM FX spectrum; in particular, ZAR gained 0.3% vs. USD and MXN near 0.4%, while Asian currencies closed generally on a softer footing. At the same time, TRY and BRL posted the biggest gains: 0.6% and 1.0%, respectively. Overall, RUB is still about 7.0% behind the average EM FX YTD. Moreover, now even re-based to the beginning of May (i.e. the beginning of QE tapering talks) RUB looks undervalued by 2.0-3.0% relative to EM FX, which is barely justified by the fundamentals. Meanwhile, exporters remain on the sidelines, not selling hard currency (or better to say, markedly smaller chunks than usual are being sold), and we expect the offer from exporters to pick up next week ahead of the MET and corporate profit taxes.
Maxim Korovin, Anton Nikitin
VTB Capital analyst


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