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RUB: appreciation continued

Yesterday, RUB continued on a stronger footing right from the morning and by the end of the day, it had firmed 0.4% against USD (34.39) and 0.5% vs. BASKET (40.05). Generally stronger risk sentiment with a broad EM FX mini-rally fuelled the price action in RUB. However, the strong performance of the Russian equity market (the RTS index was up 1.4%) amid the announcement of a gas contract between Gazprom and China worth USD 400bn produced a positive impact as well. Especially, given that China is to provide a USD 25bn pre-payment (although since there have not been any details so far, we would not got overly excited about it). Nevertheless, the average EM FX index firmed only 0.2-0.3% yesterday, so RUB continued gradually outperforming; ZAR and TRY, though, did better and gained 0.8-0.9% vs. USD at the end of the day. As we have highlighted before, at the moment the YTD performance gap between RUB and EM FX is holding around 6.5-7.0%, and looking at the historical performance we think that RUB might narrow it another percentage point or so.
Maxim Korovin, Anton Nikitin
VTB Capital analyst


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