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RUB: at new lows

On Friday, RUB was fairly stable, trading in the 49.15-49.75 range for most of the session. Total turnover in the MICEX was USD 4.9bn, which is relatively healthy compared to the flow figures in the first half of November. However, late Moscow time, the crude oil price dipped below 70 USD/bbl, which hurt RUB's performance. Brent stands near 67.8 USD/bbl, 5.4% lower below Thursday’s level. Hence, this morning USDRUB is hovering near 50.80, i.e. 4.4% in the red compared to Thursday. Meanwhile, NOK slipped only 1.5% on Friday, while the EM FX index declined around 0.7-0.8%: MXN and BRL underperformed having closed down 1.2-1.3%. In addition, we highlight there have been some signs of an emerging 'US dollar liquidity deficit' issue (see below), which might have contributed to RUB's weakness. However, the situation does not so far fully resemble August-October conditions. Overall, we estimate that RUB has weakened near 32% in real terms YTD, while the crude oil price has slipped around 40%. Hence, RUB's sensitivity to crude's performance was around 0.8x, but we think every 10% decline in the Urals crude price requires 6% of RUB REER depreciation in order to sustain the C/A balance. Nevertheless, despite some fundamental considerations, we suppose technically RUB remains in vulnerable positions right now.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst

ruble, dollar, euro

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