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RUB: red ink everywhere


The main event for the markets at the start of the week was the result of Sunday's referendum in Greece, with most markets moving into the red. Greek banks now face a solvency crisis which compelled the ECB to tighten Greek collateral conditions yesterday by "adjusting the haircuts" on collateral, though the ECB kept the liquidity cap unchanged. EU leaders meet later today and the choice is simple: let Greece leave monetary union or keep it inside and provide some form of debt restructuring.

Risk off sentiment affected the Russian FX market as well, pushing RUB down to 56.88 (-1.6%) against USD. Trading activity remained modest, with MICEX reporting USD 3.2bn of turnover. The oil market came under heavy pressure: spot Brent dropped 6.6% to USD 55.6/bbl, the lowest level since April. Following the oil market, NOK dived 1.1%, while the EM universe looked more resilient, with the EM FX index closing only 0.1% in the red. TRY and MXN outperformed, gaining 0.5% and 0.1%, respectively. At the same time, ZAR fell 0.6% and Asian currencies decreased 0.2-0.3%.

Yesterday, banks refinanced USD 2.6bn of FX repo debt, taking the full limit at the 28-day FX CBR repo auction. The weighted average rate was set at 2.19%. Hence, after settlement on Wednesday, banks’ total debt to the regulator on FX repo operations is to remain at USD 32.8bn.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, ECB, FX market

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