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RUB: refreshing year highs

 
26.03.2015

Yesterday, RUB remained well bid, and USDRUB had already declined to 56.90 in the morning. Exporters continued actively selling hard currency as the tax period proceeded, while we understand that many market participants are stuck in long USDRUB positions accumulated above the 60.0 level. As a result, there is a lack of incremental bid right now to balance the export selling flows. Meanwhile, MICEX reported total turnover in USDRUB of almost USD 5.0bn yesterday. The recovery crude prices also provided support during the day, with Brent closing up 2.1% at USD 54.4/bbl. At the end of the day, RUB closed 0.5% in the black at 57.43, whilst the EM FX index weakened 0.6% vs. USD, with BRL and TRY falling behind, slipping 1.4% and 1.9%, respectively. Commodity-based currencies looked unimpressive as well: AUD and NZD slid 0.4-0.6%, while NOK firmed a moderate 0.2%.

Separately, we highlight that the CBR published statistics on retail FX purchases in January, which revealed a sharp drop in demand for hard currency. In January, households were net FX sellers of USD 320mn, while in December their net FX purchases amounted to USD 8.2bn. Clearly, the fact that the excessive retail bid faded away has helped the exchange market to recover this year. Last week, we argued that USDRUB could slip to the 55.0 mark as the peak of external debt repayments has passed. We still think that the 55.0 target for USDRUB is plausible, especially if certain stop-losses are triggered (which is rather likely, in our view). However, we also think that at these levels, the import bid could strengthen, while the export offer might fade away with the end of the tax period and crude oil off YTD highs. In light of this, accumulating a tactical long in USDRUB (especially on the dips) looks justified to us, while we keep our year-end forecast of 56.0 for USDRUB.

Maxim Korovin, Tatiana Zueve
VTB Capital analysts

Tags:
ruble, oil

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