Trading activity in the Russian exchange market is at decent levels – yesterday, the MICEX reported USD 7.5bn turnover in USDRUB. Sentiment in the market is still shaped mainly by the swings in crude oil, which is rather volatile these days. Brent started the session in the red having dipped to USD 48.5/bbl, later bouncing to USD 50.8/bbl just to drop to USD 47.7/bbl within a couple of hours. However, at the end of the day crude closed in the black at USD 50.5/bbl (+1.9%).
RUB dynamics were a bit puzzling: it had readily weakened during the periods of oil's negative performance, but its reaction to crude's bounces was rather muted. In the morning, RUB kicked off on a softer footing with USDRUB spiking to 67.00 and climbing up to 67.90 in a matter of hours. In the afternoon, Brent's temporary recovery helped RUB to just pare some of the intraday losses, while Brent's dip below USD 48.0/bbl pushed USDRUB quickly to 68.05. In the end, RUB closed at 66.95 (-0.4%) against USD, even though oil closed visibly in the black.
As we have argued before, if oil consolidates around USD 50/bbl in the near-term, then RUB has some marked room for recovery. Meanwhile, commodity-based currencies recovered 0.3-0.5% yesterday. Overall, risk appetite in the EM space was subdued as the EM FX index slipped 0.2%, but the underlying performance was rather mixed: for example, BRL underperformed losing 1.7%, but it was countered by MXN's bounce of 0.9%.