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RUB: crude recovery stalls

Yesterday, a weak performance on the oil markets shaped Russian FX sentiment. Brent declined 3.5% to USD 45.5/bbl as the IMF joined its counterparts at the World Bank by downgrading its global GDP forecasts. The IMF now expects global GDP to expand 3.5% this year and then 3.7% in 2016. In light of this, RUB weakened 0.6% to 65.2, against USD, which was in line with the performance of NOK (which also fell 0.6%) and far better than NGN (down 1.4%). Meanwhile, EM FX was a mixed bag, with the total index closing nearly flat, but ZAR firming 0.4% and MXN and TRY slipping 0.3-0.4%. Yesterday, the CBR allocated USD 2.5bn at a one-week FX repo auction at an average rate of 0.67%, bringing the total amount of outstanding FX repo to USD 19.7bn. Separately, the central bank announced two FX 312-P auctions (providing FX liquidity against the collateral of FX loans). The first two auctions, for 28 and 365 days, are to take place on 26 January, offering USD 1.0bn each. The news is positive for RUB, since the CBR is expanding the number of instruments that support the system’s USD liquidity balance; however, given the sharp oil move, we believe that the immediate effect will be marginal.
Maxim Korovin, Tatiana Zueva
VTB Capital analyst


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