Yesterday morning, RUB once again raised eyebrows with strong resilience to the sluggish performance in oil prices. Later, Brent bounced up 5.8% to USD 54.3/bbl, which, in turn, was not ignored by the Russian FX market. In the end, RUB closed at 59.45 against USD (+3.4%), well ahead of EM FX peers. In particular, ZAR advanced 2.4% against USD, TRY gained 1.7%, and MXN ended the day 1.9% in the black. Commodity-based currencies traded in the black as well, with NOK up 1.8% against USD, whereas AUD and NZD gained 2.1-2.5%. Trading flows in the Russian FX market dropped off visibly, with USDRUB turnover on MICEX declining to USD 3.3bn.
Export’s FX offer ahead of the taxes next week continued to support RUB, but its recent immunity to the oil price drop is still remarkable. In March, Brent decreased 10.8%, NOK slipped 5.8% and the EM FX index was down 2.0%, but RUB has firmed 5.2% MTD. In our view, unless RUB’s outperformance were to prove to be purely technical (i.e. we underestimated the size of export selling so far, which would fade away at some point), its strength could well highlight that the economy and the market had adapted to the fact that the external financial markets are de facto closed for Russian borrowers. We highlight that the peak of external debt de-leveraging is behind us this year. On the other hand, the CBR has provided an additional USD 12.2bn in FX refinancing YTD. We estimate that the external de-leveraging, amid restricted access to external funding, was a visibly negative factor for RUB last year. However, if that effect is indeed fading away, we think USDRUB could scratch on 55.0, even if Brent stays at the current levels.