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RUB: following oil


On Friday, the Russian FX market corrected, dragged down by the fall in oil prices and slowdown in export hard currency selling flow. Brent had a heavy session, losing 3.4% during the day and bottoming to USD 60.8/bbl. Moreover, it seems that the support from the export side moderated on Friday as MICEX turnover amounted to only USD 3.5bn. Given this backdrop, RUB kicked off on a weaker footing right in the morning, slipping to 54.04 (-1.1%) against USD by the evening. However, we highlight that for the week as a whole, RUB firmed near 1.9%, while other EM currencies gained near 0.8-1.0% for the same period. Therefore, a correction in RUB should not raise eyebrows here, in our view. Commodity-based currencies traded mixed: NZD and AUD declined 0.3-0.4% on Friday, while NOK was up 0.9%. There was no single direction in the EM space either, so the average index closed flat to the previous session. TRY and ZAR were in demand, gaining 0.7%, while BRL was under pressure, losing 1.2%.

Key tax payments fall this week, with VAT and MET due on 25 June and CIT due on 29 June. This is set to provide support to RUB in the near term, in our view; however, on the medium-term horizon seasonally higher capital outflows (tourism and dividends) coupled with increasing corporate debt redemptions could weigh on RUB’s performance, assuming crude oil stays in the USD 60-65/bbl range.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, oil

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