Yesterday’s session in the Russian FX market was fairly volatile, amid relatively modest trading flow: MICEX reported only USD 3.3bn in USDRUB turnover. In the morning, RUB continued appreciating, fuelled in particular by the further recovery in the crude oil market. Hence, by midday USDRUB had slipped to 60.40, which proved to be a turning point as crude pared earlier gains. By the end of the day, Brent declined 1.5% to settle at USD 56.3/bbl. Subsequently, USDRUB surged to 61.28, yet RUB still firmed 0.7% against USD.
Meanwhile, NOK and other commodity-backed currencies gained 1.3-1.5% yesterday. The EM FX index ended 0.2% in the black, with TRY up 1.0% offset by BRL (-1.3%) and ZAR, which slipped marginally. A disappointing US sales report for February took some steam out of the US dollar’s ascent, though the 3-month US LIBOR rate remained elevated, implying that the market is still keeping this June in sight as lift-off for the first hike in the fed funds rate. The ECB extended emergency liquidity assistance again to Greek banks yesterday, which provided some support to the euro, but talks between the Greek government and its official creditors remain unresolved.