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ruble

  • 9
    JUL12
    Ruble REER continued to weaken in June, declining 4.3% MoM

    The ruble real effective exchange rate weakened 4.3% MoM in June, intensifying from a drop of 1.7% MoM (CBR upgraded May data from -2.0% MoM), bringing the YTD change to a negative value of -0.4% (from +4.0% in January-May). The ruble fell against the dollar,...

  • 24
    NOV14
    Local sovereign debt: hand in hand with FX.

    OFZs gained 0.3-0.6pp in price terms on the belly and the longer end of the curve. Most of the price action happened in the evening, when crude oil prices surged. In the end, the OFZ curve tightened 10-12bp on the belly and 6-7bp in the long end. Hence, we think local investors (who are historically more active in mid-term bonds) played the first hand yesterday. RFLB 28 closed at a yield of 10.20%, while RFLB 19 6.70 ended at 10.40%.

  • 24
    NOV14
    RUB sell-off props up consumer spending, IP sustained strength

    On Friday, Rosstat published its package of monthly statistics for October. Our View: October saw both demand and output indicators somewhat stronger than we expected. Sharp RUB depreciation likely affected the ordinary behaviour of economic agents, with companies slashing capex further and households bringing discretionary spending forward and shifting savings into dollars and real estate assets. On the supply side, robust IP contrasted with a sharp decline in agriculture, but overall the dichotomy...

  • 21
    NOV14
    RUB: tax support?

    Yesterday, RUB started trading firmly right at the beginning of the day. In the end, it gained 1.0% against USD (46.29) and 1.2% vs. EUR (57.97). To some extent, RUB’s performance was part of the general recovery in the EM FX space: on average, EM currencies strengthened 0.3% against USD. Meanwhile, ZAR traded up 0.9%, while TRY gained 0.5%. In addition, NOK closed 0.5% in the black, amid the bounce in Brent from the day lows of USD 77.60 to USD 79.55/bbl at the end. Finally, it is the middle of...

  • 21
    NOV14
    Local sovereign debt: hand in hand with FX

    OFZs gained 0.3-0.6pp in price terms on the belly and the longer end of the curve. Most of the price action happened in the evening, when crude oil prices surged. In the end, the OFZ curve tightened 10-12bp on the belly and 6-7bp in the long end. Hence, we think local investors (who are historically more active in mid-term bonds) played the first hand yesterday. RFLB 28 closed at a yield of 10.20%, while RFLB 19 6.70 ended at 10.40%.

  • 20
    NOV14
    RUB: stronger than peers

    Yesterday, RUB kicked off lower with USDRUB picking up to 47.21 in the morning. However, the market later recovered, encouraged perhaps by crude’s firmer performance (although it pared later). Nonetheless, RUB closed flat against US (46.86). In the meantime, the general performance of EM FX was sluggish: TRY slipped 0.6% against USD together with KRW and MXN (the average index slipped 0.2-0.3%). In addition, yesterday NOK and other commodity based currencies weakened near 0.8-1.0%. Hence, RUB strengthened...

  • 20
    NOV14
    Local sovereign debt: uneventful session

    Trade action in the OFZ market was subdued and directionless yesterday. Longer dated bonds saw some bids, with RFLB 28 (YTM 10.26%) settling near 0.2pp higher. In contrast, the belly of the curve traded a bit weaker with quotes marked down 0.1pp. Overall, the curve tightened 2bp in the long end and widened 3bp in yield in the belly and front end. Meanwhile, the auction for RFLB 16 6.0 (YTM 10.00%) left mixed feelings. Total demand was not bad (RUB 2.2bn), yet the Ministry of Finance decided to...

  • 19
    NOV14
    RUB: back in the black

    Yesterday, RUB kicked off on a stronger footing, touching 46.65 against USD. However, it later surrendered some of the earlier gains, with USDRUB closing at 46.85, i.e. the Russian currency appreciated 0.74%. RUB’s recovery was part of a global trend, as EM FX index firmed 0.4% vs. USD, with ZAE up 0.9%, whilst BRL advanced 0.8% and TRY closed 0.4% up. In addition, the recovery of crude oil prices helped, so NOK gained 0.9%. Meanwhile, trading activity remained limited, with the total daily turnover...

  • 18
    NOV14
    RUB: subdued trading activity

    Yesterday, trading activity in Russia was low, with the MICEX recording a total turnover just shy of USD 3.5bn. Given that this is a week in which companies start paying heavy taxes, the liquidity of the FX market leaves much to be desired. In these circumstances, trading was erratic yesterday: in the morning, USDRUB touched 47.50 then slid down to 47.05 after midday. For most of the session, USDRUB traded in the 47.20–47.40 range. At the end of the day, RUB settled at 47.20 against USD, i.e. almost...

  • 17
    NOV14
    RUB: in the red again

    On Friday, RUB had a weak opening with USDRUB printing a high of 47.50. The sluggish performance of crude oil the day before ignited the price action at the start, which was further amplified by the deteriorating market liquidity amid elevated concerns that households' bid for hard currency might still be intact. Overall, trading volumes in the Russian exchange market remained subdued: MICEX recorded just USD 4.4bn of USDRUB flow on Friday. At the end of the day, RUB lost 1.6% against USD (47.31)...

  • 17
    NOV14
    Macro week ahead – RUB devaluation spillover into October stats

    Rosstat is to publish its monthly report for October later this week, while the MPCs in Turkey and South Africa are to take decisions on rates. The October monthly report from Rosstat is the main heavyweight on the data front this week. Were it not for the RUB devaluation, we would have expected the same bleak picture with a gradual, albeit persistent, erosion of private domestic demand and a slightly more resilient trend on the supply-side of the economy which is helped by import substitution,...

  • 14
    NOV14
    RUB: vortex

    Yesterday, RUB lost 2.0% against USD (46.54) and weakened 2.2% vs. EUR (58.07). The performance of crude oil (Brent closed 3.3% in red) could perhaps be given as a formal reason behind the soft price, but in our view the current trading levels of the Russian currency already price in subdued crude oil levels for the next 12 months. We highlight that surging volatility in RUB is killing liquidity and this, in turn, amplifies price swings in any direction. In particular, yesterday’s total trading turnover...

  • 13
    NOV14
    RUB: ups and downs

    Yesterday, RUB performed boldly, firming 2.4% against USD (45.59) and EUR (56.78). The rest of EM FX traded on a stronger footing as well, but RUB’s volatility eclipses everything these days. Hence, the EM FX index closed about 0.1% stronger vs. USD, with ZAR and TRY up 0.2–0.3%, while MXN ended 0.4% in the black. Meanwhile, Brent traded down to USD 79/bbl, which dragged NOK 0.1% weaker against USD. However, as we have argued already, the key drivers for RUB are household purchases of FX and export...

  • 12
    NOV14
    RUB: back in the red

    Yesterday, RUB weakened 2.3% against USD to close at 46.69. The Russian currency slipped amid struggling crude oil as Brent touched USD 80/bbl. However, the rest of EM FX traded on a firmer footing: the composite EM FX index closed a little in the black, while ZAR outperformed. picking up 0.5% vs. USD. RUB is now the most volatile currency amid EM FX peers, succeeding the previous ‘champion’, BRL.

  • 10
    NOV14
    RUB: roller-coaster

    Friday’s price action in the Russian exchange market was rather jittery. In the morning, USDRUB spiked to 48.50, but at these levels RUB found some support as market participants were taking profits amid growing expectations that the CBR would take action against excessive pressure on RUB. The latter feelings were supported by the news that the CBR governor had a meeting, although its topic was unspecified. In light of this, USDRUB dropped from 48.50 to 46.00 (i.e. RUB appreciated 5.4% intraday)...

  • 10
    NOV14
    Macro week ahead – RUB behaviour is in focus amid thin dataflow locally

    The behaviour of the Russian currency is to be in focus this week, after persistent pressure last week pushed the CBR to threaten ad hoc interventions, while on the data front we shall be watching for second tier releases on international trade and budget execution. All CE3 countries are scheduled to publish flash 3Q14 GDP estimates as well October CPI prints. Pressure on RUB persisted throughout last week amid growing signs of an increase in the dollarisation of household savings. This, with...

  • 7
    NOV14
    RUB: a depreciation spiral

    Yesterday, RUB lost almost 4.0% against USD (46.67) and near 3.5% vs. the BASKET (51.70). Clearly, it was one of the worst sessions for RUB, perhaps since 1998. Meanwhile, EM FX traded on a softer footing as well; in particular, TRY and ZAR slipped 0.8-1.0%, while BRL lost 2.4%. In addition, NOK slipped 0.6% on the back of sluggish crude oil performance. However, we think RUB’s performance is not connected with global factors. Although some increase in geopolitical risks yesterday added to FX volatility...

  • 6
    NOV14
    RUB: negative reaction to CBR’s policy changes

    Yesterday, RUB weakened near 2.6% against USD (44.87) and surrendered around 2.4% vs. BASKET (48.90). Overall, during the day USDRUB traded as high as 45.00. This was in reaction to the news of the CBR’s changes to the FX policy. Meanwhile, the EM FX index lost near 0.6-0.7% vs. USD with ZAR and TRY trading down near 1.0%. Overall, we think the pressure on RUB is now driven first and foremost by domestic clients’ flow, especially, household demand. Hence, it has little to do with the crude oil price...

  • 5
    NOV14
    RUB: paring the gains

    On Friday, despite a rate hike, RUB weakened considerably. It lost 3.0-3.3% against both USD (43.01) and BASKET (47.88). We think market participants expected (as we did) some changes to the CBR’s FX policy as well, whereas the regulator refrained from addressing issues with USD liquidity and mounting pressure on international reserves. Thus, we are closing our short USDRUB trade as a stop-loss had been triggered, being 1.2% in the red. Meanwhile, Friday’s price action fully erased the gains of Thursday’s...

  • 5
    NOV14
    Macro week ahead – CBR's reaction to re-intensifying pressures on RUB

    Re-intensifying pressures on RUB require additional policy action on top of the rate hike last Friday to stabilise the situation on the FX market, but it remains to be seen whether the CBR is prepared to act quickly. Apart from the CBR's potential reaction, we await monetary policy decisions in Poland and the Czech Republic, as well as a fresh CPI report for October from Rosstat. Pressure on RUB intensified again late last Friday and early this week amid softening oil quotes and an escalation in...

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