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RUB: ahead of the EM FX index


Yesterday’s session ended positively in the Russian exchange market, even though Brent crude declined 4.4% to USD 58.50/bbl. At the end of the day, RUB firmed 2.8% against USD to close at 61.56. In the first half of the day, RUB traded near 62.50, but later enjoyed a sharp appreciation. We think exporters could have increased the hard currency selling offer ahead of the taxes next week, because in February export was mostly on the side lines in the FX market.

In addition, the Ministry of Finance said that it had started converting FX from the Reserve Fund directly with the CBR. To recap, several weeks ago MinFin pre-announced that it intended to tap the fund for RUB 500bn. Hence, the operation is neutral for the FX market in the near term, but the CBR said that it might consider offsetting MinFin’s operations in the open market, if the market situation was appropriate. Hence, even that conditional and theoretical possibility was enough to spook RUB’s sellers, given the solid performance of crude oil. We think that in the near term, the exchange market might continue benefiting from export support: we estimate that exporters need to sell USD 5-6bn to meet oil related taxes in February.

Meanwhile, the EM FX index firmed 0.3% yesterday. We highlight that RUB has weakened just 1.4% against USD YTD, while the EM FX index has declined 1.5-2.0% for the same period. RUB is trading broadly in line with NOK YTD and marginally outperforming the EM FX peers on average.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts


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