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RUB: in the black most of the day amid nice two-way flow

Yesterday’s trading session was quite active with the MICEX recording USD 5.5bn in turnover. Trading was fairly volatile and USDRUB moved between 58.15 and 63.88. RUB went on to close little changed against USD at 61.62 as Brent crude oil failed to preserve its gains. The latter traded as high as USD 63.0/bbl intraday (i.e. was up 5%), but ended down at USD 59/bbl. EM FX firmed 0.5% with ZAR and TRY up 0.4-0.7%, whilst BRL surged 2.0%. In addition, commodity-based currencies traded in the black as well: NOK picked up 0.3%, AUD and NZD advanced 0.3-0.5% and NGN gained 1.3%. Meanwhile, we noted that the considerable selling interest from export was met by retail demand mostly, in our view. In addition, elevated money market rates provided a certain support for the FX market. We expect exporters will remain active in the market as heavy taxes kick in next week. At the same time, swings in household FX demand are unpredictable and remain the key risk, in our view. Finally, we highlight that Brent crude oil seemed to be bottoming out at USD 59/bbl this week. Against this background, we think RUB has more legs for strengthening after an overshoot this week.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst


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