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RUB: in tandem with oil


Yesterday, RUB saw heavy pressure, hammered by crude’s plunge to below USD 50.0/bbl. Oil started to fall in the morning, and moved down nonstop for the rest of the day. By the evening, Brent had lost 5.2%, crashing to USD 49.5/bbl and printing one of the weakest results of the current year. Like oil, RUB settled on a downward trend from the open, finally stopping at 63.55 (-2.9%) against USD. Trading activity was decent, with MICEX reporting USD 5.3bn of turnover. Against other commodity-based currencies, RUB looked like it had overreacted a bit to the pressure: NOK slipped 0.9%, while AUD and NZD declined 0.3-0.4%. The EM FX space slipped into the red too, dragged down by BRL (-0.9%), SGD (-0.4%) and TRY (-0.4%). At the same time, Asian currencies traded generally on a stronger footing, firming 0.1-0.3%.

Yesterday, the CBR conducted a 28-day FX repo auction, offering USD 2.6bn to banks. The money was taken in full at an average rate of 2.19%. The Treasury FX deposit auction, with a USD 1bn limit (29 days), was completely ignored yesterday. Meanwhile, we highlight that the spread between overnight FX swap and RUONIA declined to -40bp on Friday and most likely remained in negative territory, yesterday. Last autumn, the substantially negative overnight FX swap-RUONIA spread signalled the mounting shortage of USD liquidity in the interbank market, which was one of the negative factors behind RUB's spot weakness.

This week, in addition to the regular one-week FX repo auction, banks also have the option to borrow USD 0.5bn at the 312-P auction on Friday.

Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, oil

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