RUB slips on local pressure and Ukraine
The Russian currency finished yesterday’s session on a softer footing, having lost 0.3-0.4% to both USD (35.59) and BASKET (41.60). Meanwhile, despite some initial pressure, EM FX gained ground in the second half of the day: on average, EM currencies firmed 0.1-0.2%, with ZAR being a clear outperformer (0.8% vs. USD). Commodity-based currencies also firmed generally, with NOK closing 0.2% stronger vs. USD. We think RUB tanked mostly on the back of local demand for FX driven by households. Anecdotal evidence is that during the previous couple of sessions, RUB has been weakening during the first half of the day (i.e. MOEX time), but paring losses during US trading hours. Another consideration is that tensions over Ukraine once again started weighing on RUB as, in particular, Deputy Finance Minister Sergei Storchak mentioned the high probability of Ukraine’s default.
Maxim Korovin, Anton Nikitin
VTB Capital analyst
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