In the morning, oil continued to move south, damping risk sentiment on the Russian FX market. Hence, RUB kicked off softer, weakening to 68.85 against USD at the opening. However, after testing USD 47/bbl, Brent’s dynamics reversed, and by noon it had climbed to USD 48/bbl, providing support for RUB. Given expectations over US crude stocks statistics, oil lost momentum for a while, but soon resumed its ascent, climbing to USD 48.90/bbl (+2.8%) by the close. The US DoE data was mixed. Crude inventories picked up 2.6mn barrels, but the fall in US oil production (for the fifth week in a row) and a 900,000 barrel decrease in Cushing stockpiles supported the market. On the back of oil’s recovery, RUB continued to strengthen but, as in recent days, it posted more moderate gains. RUB closed at 67.72 against USD, rising 1.2% over the session. Trading activity decreased, with MICEX turnover printing only USD 4.3bn. The EM FX universe traded mixed. On the one hand, ZAR was up 1.2%, followed by TRY (+0.5%) and THB (+0.5%). At the same time, BRL came under pressure, losing 1.8%, while KRW and IDR closed 0.4-0.5% lower.
Today, the CBR monetary policy meeting is in the spotlight. We expect the regulator to keep the key rate intact, meaning no impact for the Russian FX market. Oil is to remain the key factor for RUB in the near term, and if Brent stays around USD 50/bbl, RUB has marked room for upside, in our view.