RUB started the week on a positive note, appreciating to 58.75 (+0.9%) against USD. Yesterday, RUB gained double support, as the tax week kicked off and Brent bounced 1.1% to USD 53.79/bbl. Meanwhile, the EM FX index rose 1.2%, with BRL in the lead, advancing 3.1% against USD. Commodity-based currencies were also well bid: NOK firmed 1.8%, while NZD and AUD ended the day 1.1% and 1.4% in the black. On Friday, the CBR held its FX 312-P auction, allocating USD 950mn for one year at 1.45%. At the same time, the auction for 28-day FX loans was cancelled due to the absence of bids. Yesterday, banks continued to borrow FX liquidity from the regulator, securing USD 2.8bn at the 28-day repo auction and USD 1.5bn in one-year repo. Today, banks need to roll over USD 2.9bn at the one-week FX repo auction. Otherwise, tomorrow banks’ FX debt to the regulator is to decline USD 2.2bn to USD 30.2bn amid heavy redemptions. Demand for the Treasury’s FX deposit auction was moderate: only one USD 200mn bid was fulfilled at an average rate of 1.0%.
In our view, the modest demand for FX regulatory funds might be an indication of the fundamentally lower domestic bid for hard currency as the peak of external debt de-leveraging has passed this year. Nevertheless, the CBR’s FX refinancing tools have proved their efficiency so far. Thus, in case of need, banks would be able to secure additional FX liquidity from the regulator as the situation with collateral has improved recently. Therefore, we expect the spread between overnight FX swap and RUONIA to keep near zero or slightly positive. For the FX spot, this is an encouraging sign highlighting that limited access to the external capital markets is becoming less of a pressure. If this situation proves sustained, as we have argued before, RUB might continue appreciating, even if crude oil stays flat around USD 55/bbl in the medium term.