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RUB: tax factor fades away


Yesterday, the Russian FX market underwent a correction, as the export flow visibly abated with the end of the tax period. RUB kicked off softer from the morning, with the market starting to accumulate positions ahead of the CBR’s policy meeting on Thursday. The back down in oil prices put additional pressure on RUB, finally drawing it down 2.2% to 52.02. In turn, Brent surrendered 1.7% to close at USD 62.6/bbl. In the meantime, EM peers were trading strong, with the EM FX index closing 0.5% in the black. BRL and TRY enjoyed the strongest bid, rising 1.2% and 1.5% respectively, ZAR firmed 1.0%. Despite the slide in oil prices, commodity-based currencies also held a good session, with NOK and NZD advancing 0.6%, while AUD inched up 0.5%.

Yesterday, the CBR considerably cut the limits on FX repo auctions, offering just USD 500mn at the one-year auction and USD 1.7bn for the 28-day period. The former was taken in full amid USD 782mn of demand; the weighted-average rate was set at 3.41%. At the 28-day auction, banks secured USD 1.4bn at an average rate of 2.38%. Hence, banks fully refinanced USD 1.9bn of funds maturing this week, so even if today’s one-week repo auction does not find any bids, the volume of FX repo remained unchanged at USD 34.8bn.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, FX market

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