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  • 9
    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,...

  • 4
    RUB: not as bad as one might think

    Yesterday morning, BASKET spiked almost to 43.00, while USDRUB broke through 36.80, but the sell-off was rather short-lived thanks to decent CBR support. During the first trading hour, we estimate the regulator sold about USD 6.0bn in interventions, but without the accompanying shift in the BASKET band. Thus, effectively the CBR showed an offer below the market’s initial bid. In total, we think the CBR conducted USD 11-13bn in FX interventions yesterday amid total turnover of USD 17.2bn in USDRUB...

  • 4
    What’s next?

    High political uncertainty puts any projections on very shaky ground, to say the least. Thus, we believe that the best strategy is to wait for the dust to settle. Overall, the risk of more negative headlines coming in the near term is quite high, in our view, which would sustain the premium in Russian FX and rates for a while. Moreover, we do not rule out that the CBR might take more steps aimed at preserving financial stability in the event of mounting pressure on the Russian currency. On the other...

  • 3
    RUB: increased political uncertainty

    On Friday, RUB reacted positively to the press-conference of Viktor Yanukovich: at the end of the day, RUB had firmed near 0.4% against BASKET (42.00) and almost 0.7% vs. USD (35.86). However, escalation of Russia-Ukraine tensions over the weekend makes Friday's price action largely irrelevant. The safety bid of households for hard currency has markedly mounted up over the weekend, which is likely to hit the market this morning. Given that RUB has lately been underperforming EM FX on the back of...

  • 28
    RUB: widening the gap to EM FX

    Once again, RUB yesterday traded apart from the rest of the EM FX universe: by the end of the day, RUB had lost 0.3% against USD (36.11) and 0.5% to BASKET (42.16). Selling pressure on RUB mounted right from the morning and persisted for the whole session. Meanwhile, most other EM currencies closed stronger against USD: BRL firmed 1.3% and ZAR advanced 1.1%. Therefore, RUB is now underperforming the average EM FX index by almost 9.0%, a record wide during recent years. Ongoing political turmoil in...

  • 27
    Instability in Ukraine weighs on appetite for rouble

    On Wednesday, RUB lost some 0.8-0.9% vs. hard currencies and remained on a downward trend vs. other emerging market currencies. RUB is underperforming 7-8% YTD. USDRUB closed at 36.01 and RUBBASK is quoted at 42.02 in the morning. Meanwhile, USDRUB turnover was only USD 3.5bn on the MICEX despite RUB refreshing lows since 2009. The intra-day low was 42.10; however, we do not believe that the CBR was selling there in size, as it was the upper bound of the dual-currency basket the day before. The major...

  • 26
    RUB slips on local pressure and Ukraine

    The Russian currency finished yesterday’s session on a softer footing, having lost 0.3-0.4% to both USD (35.59) and BASKET (41.60). Meanwhile, despite some initial pressure, EM FX gained ground in the second half of the day: on average, EM currencies firmed 0.1-0.2%, with ZAR being a clear outperformer (0.8% vs. USD). Commodity-based currencies also firmed generally, with NOK closing 0.2% stronger vs. USD. We think RUB tanked mostly on the back of local demand for FX driven by households. Anecdotal...

  • 25
    RUB: corporate sector to pay mineral extraction tax

    Trading activity in RUB was rather active, with USD 5.6bn traded through USDRUB with (T+1) settlement in MICEX as the corporate sector was preparing for MET payments on Tuesday and there was some relief in Ukraine. We estimate that the corporate sector is due to pay up to RUB 330bn today, including excises. RUB traded in the range of 41.40-41.60 vs. BASKET and 35.40-35.60 vs. USD. Overall, RUB moved in line with other EM currencies and it continues to look 5-6% cheaper than RUB-EMFX historical valuations...

  • 21
    RUB: in line with EM FX

    Yesterday, RUB lost 0.4% to USD (35.78), yet closed only 0.07% weaker vs. BASKET (41.72). However, we highlight that to a large extent RUB’s weakening was just technical: on Wednesday, EM FX slipped visibly late in the night, when RUB trading had already stopped. Thus, yesterday morning USDRUB opened with a gap at 35.85, while BASKET trading started at 41.90 reflecting EM FX weakness. Hence, compared with the opening levels, RUB firmed 0.4% against BASKET and about 0.2% to USD, which was in line...

  • 19
    Separately, MinFin talks about introducing a limit on the Treasury’s account in the CBR

    In other news, Moiseev said yesterday that MinFin and the Treasury were discussing a mechanism for imposing a limit on the Treasury’s account in the CBR. This could potentially be done during 1Q14. Consequently, all funds above the limit would be allocated to banks. Effectively, this would limit the budget’s sterilisation during the year, which is again rather positive for banking liquidity and money market rates. In particular, we highlight that by the end of November last year, the Treasury had...

  • 18
    RUB: major laggard among the EM currencies

    On Monday, the FX market was moderately active as the US markets were closed and MICEX turnover was around USD 4bn with (T+1)-settlement. RUB weakened to 41.10 vs. BASKET and to 35.25 vs. USD, albeit the overall appetite for EM currencies remained fairly strong. As such, RUB is underperforming its peers by 5-6% since the beginning of the year, which looks like the weakest dynamics in the last three years. In our view, this fully prices in all the risks associated with RUB, i.e. lower FX interventions...

  • 17
    RUB continues struggling behind EM peers

    On Friday, RUB weakened near 0.1% against BASKET (41.00) and closed barely changed vs. USD (35.17). In the morning, RUB traded on a softer footing, together with the rest of the EM FX spectrum, but pared earlier losses towards the end of the session (again, positive price action was ignited by the EM FX recovery). Meanwhile, on average EM FX firmed 0.3-0.5% against USD on Friday, so the gap between RUB and EM peers continued to widen. Thus, RUB is trading about 6.5% weaker against USD YTD, while...

  • 14
    RUB: severely behind peers

    Yesterday, RUB weakened 1.3% against BASKET (40.97) and 1.0% vs. USD (35.17). The Russian currency was the clear laggard, as EM FX actually firmed against USD, on average 0.1-0.2%, at the end of the day. Also, commodity-based currencies performed nicely (except AUD, which weakened 0.5%). However, in the morning EM FX saw pressure as well, which initially triggered some short covering in USDRUB. Meanwhile, in the middle of the session RUB tore away from the general trend and did not catch up later...

  • 13
    RUB: trading in a thin range

    On Wednesday, RUB was trading in a thin range of 40.40-40.50 vs. BASKET and 34.75-34.85 vs. USD. Overall, the turnover was around USD 3.8bn, which is close to the average volumes in recent weeks. Overall, the market is showing signs of stabilisation and implied USDRUB volatilities dropped below 10% as the market did not expect RUB to test the CBR offering sides again. Tax payments start next week and the market is to be pressured by export-related flows.

  • 12
    RUB: little changed on the day

    Yesterday, RUB traded in a range of 34.70-34.90 against USD. In the first half of the session, RUB was appreciating and touched 34.70 about the NY opening. Later, Janet Yellen's monetary policy testimony caught investors’ attention as she reiterated that the gradual QE unwind would continue. Overall, though, there were no surprises in the testimony. Hence, her comments just spurred some volatility and USDRUB spiked to 34.90, but as the dust settled at the end of the day, RUB re-gained ground. In...

  • 11
    RUB: floating in a thin range

    RUB was trading in a range of 40.40-40.50 vs. BASKET, i.e. below the CBR’s USD 400mn intervention zone. USDRUB was floating in 34.70-34.85 throughout the day. At the same time, the dynamics of EM currencies were rather weak, but this weakness was short-term and some losses were played back in the morning. Meanwhile, RUB’s stability might be perceived by the market as short-term in nature and USDRUB implied volatilities remain in the double-digit area (see chart). Overall, crude oil prices at around...

  • 10
    RUB: slightly weaker, yet in line with other EM FX peers

    On Friday, RUB gave near 0.3% both to BASKET (40.41) and the US dollar (34.76). In the first half of the session, RUB traded on a stronger footing; however, the publication of US jobs data fuelled some volatility in global markets. Hence, nonfarm payroll employment rose 113k in January, falling short of market expectations of 185k (which is in fact close to the monthly average of the last 12 months). Net revisions to the previous 2 months’ data was 34k. On the other hand, the unemployment rate fell...

  • 7
    RUB: trending higher; ECB decision had short-term impact

    Positive FX market action continued, as RUB opened at 34.70 vs. USD and at 40.20 vs. BASKET, in line with EM currencies. RUB weakened immediately after the ECB decision to leave rates unchanged: this triggered a EUR move above 1.36, and a short-term RUB move to 40.40, before a further reversal to 40.28 by the end of the day. Meanwhile, RUB remains 2.5% behind the EM FX crowd and a further reversal in risk sentiment is likely. This is especially likely given that non-resident positions in hard-currency...

  • 6
    RUB regains ground

    Yesterday’s session was strong for RUB, although EM FX in general treaded water. At the end of the day, RUB firmed 0.4% against both USD (34.91) and BASKET (40.44); however, during the day RUB touched 34.67 and 40.18, respectively. Thus, for most of trading RUB traded in the USD 200mn intervention zone, meaning the CBR’s drag on liquidity has finally eased for now. Meanwhile, we highlight that RUB outperformed by 0.3-0.4% the average EM FX index, which closed barely changed against USD: RUB was the...

  • 5
    Ministry of Finance will not purchase FX when the CBR is on offer

    Yesterday, RUB opened in line with the general risk-off mode in the morning and touched 41.15 vs. BASKET. USDRUB moved to 35.40 at the top. However, the sell-off was not long-term and RUB gradually moved to 40.70 vs. BASKET and 35.15 vs. USD. Exchange turnover was around USD 6bn on MICEX, a bit below average for the last few days. In addition to EMFX moves (that generally consolidated in recent days), RUB benefited from the Ministry of Finance’s announcement that no FX purchases will be made in the...

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