Yesterday, RUB closed at 52.28 against USD, gaining back 2.5%. Trading flows visibly moderated, as MICEX turnover printed at USD 4.2bn. However, the opening was strong again, with USDRUB plunging to 52.10, as banks were likely covering retail USDRUB selling flows accumulated over the weekend. The rest of the session, RUB held its ground, disregarding sluggish crude dynamics. Thus, Brent sagged 1.1% to USD 56.7/bbl. In particular, BRL and TRY fell 1.5-1.6%, ZAR slipped 1.2%, while the EM FX index closed 0.7% in red. Commodity-based currencies also saw pressure, with NZD and AUD surrendering 1.1% and 1.2%, respectively.
Despite the increased cost of FX repo, the CBR’s FX repo auctions enjoyed decent demand yesterday. The central bank sold the entire USD 3.0bn offered for one year at an average rate of 2.60%. The total bid was USD 4.0bn. Additionally, banks secured USD 3.2bn at the 28-day repo auction at the average rate of 1.68%. Hence, banks’ debt to the regulator on FX repo operations will increase USD 2.1bn on Wednesday, even if the one-week auction remains untapped today.