Yesterday, RUB had quite an active session in terms of the price action, while total turnover in the MICEX was USD 4.2bn. In the morning, RUB kicked off on a stronger footing, with USDRUB touching lows of 53.30. However, it later picked up to the 54.50-55.00 range and briefly spiked to 56.00. Nevertheless, in the end RUB settled at 54.71 against USD, i.e. 1.7% in the black. The bounce of Brent crude oil prices helped RUB’s gains as the former closed up 1.0% at USD 59.67/bbl, while futures surged 2.6% to USD 61.69/bbl. Meanwhile, the EM FX index weakened 0.7% against USD, with ZAR and MXN down 0.7%, while BRL lost 1.1%. There was a solid 3Q14 US GDP revision, up to 5.0% from 3.9%, according to the ‘third’ estimates released by BEA. In particular, the PCE estimate was hiked to 3.2%, from 2.2%. Statistics underpinned stronger DXY, which hit 90.00 for the first time since 2006, and the UST 10Y yield widened 10bp to 2.26%. Subsequently, EM FX came under pressure.
Therefore, RUB’s performance gap with the EM FX index declined to 34% YTD, from the 47% seen in the mid-December. Separately, we highlight that the CBR conducted two FX repo auctions yesterday: at the 12-month auction, demand was USD 43.2mn, while in the 21-day one it was USD 209.7mn. All bids were fulfilled.