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RUB: weaker again

Yesterday, RUB recorded yet another weak session, slipping 0.8% against USD (54.24). Intraday volatility was fairly low, as USDRUB was within the 54.00-54.25 range for most of the session. Trading activity remained subdued, with total MICEX turnover in USDRUB reported at just USD 3.0bn. Hence, during the last two sessions RUB’s swings have happened amid relatively poor liquidity. Meanwhile, Brent crude rebounded 0.4% to USD 66/bbl, whilst the EM FX index firmed 0.3% vs. USD. In particular, ZAR gained 0.8%, while Asian currencies closed in the black as well. In addition, NOK recovered 0.5%. Separately, the one-week FX repo auction saw greater demand than the one-month auction, but absolute volumes still do not impress. Hence, banks secured USD 145.6mn for one week at an average rate of 0.68%. In the previous week, demand at the same auction was only USD 2.2mn, while on Monday banks borrowed USD 113.3mn in the one-month auction. We think that the trading action is to remain subdued today, as in general market participants prefer to remain on the side-lines ahead of the CBR’s policy meeting tomorrow. It seems like there is no broad consensus on what the regulator is going to do, but the general feeling is that the CBR needs to come up with a sizeable package of policy measures in order to address the detriment of excessive FX volatility.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst

ruble, oil

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