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RUB: ups and downs


Yesterday, RUB performed boldly, firming 2.4% against USD (45.59) and EUR (56.78). The rest of EM FX traded on a stronger footing as well, but RUB’s volatility eclipses everything these days. Hence, the EM FX index closed about 0.1% stronger vs. USD, with ZAR and TRY up 0.2–0.3%, while MXN ended 0.4% in the black. Meanwhile, Brent traded down to USD 79/bbl, which dragged NOK 0.1% weaker against USD. However, as we have argued already, the key drivers for RUB are household purchases of FX and export delays in FX selling. In addition, market participants are guessing about the CBR’s next policy step in the exchange market after heavy verbal interventions recently and the limit imposed on FX swap operations. In light of this, we think RUB’s relatively elevated volatility could persist in the near term. Next week is rather important for the FX market, since heavy taxes kick in, which might push exporters to sell more currency (which was not really the case lately). In addition, the results of the debut 12-month FX repo and the Treasury’s US Dollar deposits need to be watched closely: if banks fail to secure enough US Dollar liquidity in the absence of regular CBR FX interventions, the pressure on FX would likely mount up when the deficit of US dollar liquidity becomes an issue once again. The latter might occur within a couple of months as banks and companies have to redeem foreign debts.

Maxim Korovin, Tatyana Zueva
VTB Capital analyst

ruble, busket

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