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RUB: at oil’s mercy



Falling oil prices continued to determine the direction of the Russian FX market. RUB opened weaker, tracking oil’s slide below USD 47/bbl. At noon, USDRUB peaked at 67.57, as Brent bottomed out at USD 46.3/bbl. At these levels, the oil market found support, going above the waterline at some point and providing firmer ground for RUB. However, the news about the pick-up in EIA US crude stocks (+2.6mmbbl last week) stopped oil’s spurt, with Brent plunging to USD 46.6/bbl (-1.2%) by the close. Having lost support, RUB resumed weakening, going well below intra-day lows and closing at 68.05 (-2.1%) against USD. Trading volumes were decent, with MICEX turnover amounting to USD 5.2bn. Exporters are indeed selling hard currency ahead of VAT and MET payments due next week, but general sentiment is shaped by the performance of the crude market. Overall, USDRUB is pricing in Brent at USD 40/bbl, we estimate.

The tenge’s 23% depreciation stirred the CIS and neighbouring countries yesterday, prompting many national banks to comment on the situation on the domestic FX markets. Among the most interesting, we highlight NBRB’s press release, which says that the regulator’s actions were aimed at curbing excessive market volatility rather than resisting fundamental factors. We believe it might be an indication of internal consensus that BYR still has room for adjustment from the BoP perspective.


Maxim Korovin, Tatiana Zueva
VTB Capital analysts

ruble, oil

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