Yesterday was a busy trading day on the Russian FX market, with the MICEX reporting decent turnover of USD 5.5bn. RUB started out in already familiar manner, shinning up to 52.40 from 53.40 during first trading hours. The rest of the session, RUB gradually moved toward the 52 level, scratching it by the middle of the day. Brent bounced 1.0% to USD 55.82/bbl, doing its bit for general market sentiment; RUB eventually advanced 3.25% against USD on the day, closing at 51.97. Meantime, EM currencies traded on a softer footing yesterday, with the EM FX index declining 0.5%. MXN lagged, slipping 1.2% against USD, ZAR weakened 1.1% and TRY closed 0.8% in red. Commodity-based currencies responded weakly to crude’s recovery: NOK fell 0.7% and NZD rose a moderate 0.2%.
We maintain our view that RUB’s outstanding performance in recent weeks is largely unrelated to oil dynamics, and has actually been driven by international accounts that were closing USDRUB longs. However, yesterday, we also noted a solid retail hard currency offer that was a key market’s driver, especially in the first trading hours. If so, RUB could gain additional support in the near term, on top of the tax period, which starts next week.