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RUB: on firmer ground


The Russian FX market started the week on a positive note, propelled by export selling activity and oil’s attempts to recover. However, trading volumes changed little, with the MICEX reporting USD 3.6bn of turnover. RUB opened strong, flirting with the 53.50 level, but later moved a bit lower, as export selling flows slowed and oil prices lost momentum. Hence, RUB firmed only 0.2%, stopping at 53.94 against USD. In the meantime, Brent finally managed to rebound, rising 0.7% to USD 61.2/bbl by the close. Overall, yesterday’s session illustrated that the bid in USDRUB is growing stronger, albeit export selling flow offsets it now in the tax period. As we have pointed out before, an increase in external debt redemptions, dividend payments and the start of the holiday period could shape higher capital outflows in the near term compared with previous months.

The EM FX universe bounced on Monday, so the EM FX index gained 0.4%. BRL recovered 0.6%, accompanied by ILS (+1.4%) and TRY (+1.1%). Commodity-based currencies lagged peers: NOK slid 0.3%, while AUD and NZD fell nearly 0.6%.

Demand at the 28-day FX repo auction doubled compared with the previous week, so banks took USD 1.1bn, almost the full limit of USD 1.3bn. The average rate was set at 2.20%. On a net basis, it was a refinancing of funds maturing this week, so on Wednesday the volume of outstanding debt on FX repo is to amount to USD 32.8bn (if the one-week auction remains untapped again). Meanwhile, the Treasury’s one-week deposit auction, with USD 0.5bn on offer, was ignored by the market, with no bids being placed at all.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, FX market

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