The ruble is actively growing on Wednesday trading in anticipation of foreign exchange interventions

MOSCOW, Jan 11 (Reuters) – The ruble appreciates on Wednesday, and an important growth driver for it was the announcement of the Ministry of Finance and the Central Bank on the resumption of operations on the domestic foreign exchange market as early as Friday under the budget rule.

By 16.30 Moscow time, stock quotes of the dollar / ruble pair with “tomorrow” calculations were close to 68.49, and the ruble is gaining in price by 1.9%.

The euro/ruble pair was at 73.78, and here the ruble is growing by 1.5%.

Paired with the yuan, the ruble is gaining 2%, quotes are close to 10.07.

Earlier today, the Russian currency momentarily gained more than 2.5% against the yuan, hitting a weekly high of 10.02, and hit a two-week high of 68.27 against the dollar.

Thus, the market reacted to the news that from January 13 to February 6, the Central Bank will sell foreign currency for rubles on the Moscow Exchange evenly throughout each trading day, while the Chinese yuan is declared as an instrument with “tomorrow” settlements.

The total volume of foreign currency allocated for these operations is 54.5 billion rubles (almost $0.8 billion in equivalent at the current market rate), or 3.2 billion rubles ($47 million in equivalent) daily.

The Finance Ministry’s yuan selling operations will help strengthen the ruble, but the impact will not be too strong, says Andrey Oparin of Tinkoff Investments.

“Now the volume of trading in the yuan / ruble pair per month is about 1.5 trillion rubles, that is, sales of the Central Bank will amount to approximately 3.5% of the current volumes. Rather, such operations will hold back the potential upward movement of the exchange rate (yuan),” Oparin believes.

According to Dmitry Polevoy from Loco Invest, given the current macroeconomic parameters, in the coming months, the Ministry of Finance will most likely continue to sell foreign currency rather than buy it.

“A significant disadvantage of the new approach is the sensitivity of operations to changes in the exchange rate for reasons independent of oil and gas – for example, more active sales of foreign currency by the population will lead to a strengthening of the exchange rate and a decrease in oil and gas revenues of the budget in rubles, therefore the Ministry of Finance will either have to sell more or buy less, depending on the conditions,” Polevoy warned.

In the morning session, the ruble depreciated to session lows, 70.41 per dollar, 10.34 per euro and 75.46 per yuan, but then went positive even before the news of interventions, continuing to maneuver between multidirectional factors of influence: the now prevailing sale of export earnings over local foreign exchange demand and at the same time the negative effect of the Russian oil price ceiling.

Current spot quotations of Urals for delivery to the northwestern regions of Europe are at $47.65 per barrel , while front futures for North Sea Brent blend are trading near $81.22 per barrel (+1.4% ).

Meanwhile, the ruble government debt market shows modest changes after also relatively modest results of the first OFZ placements this year. The Ministry of Finance sold classical securities at two auctions today for a total of 40.5 billion rubles.

External markets are waiting for tomorrow’s publication of data on consumer inflation in the US for December.

The Reuters consensus forecast assumes zero dynamics of consumer prices in December and a slowdown in inflation on an annualized basis, to 6.5% against the previous value of 7.1%.

The dollar has been trading near seven-month lows for the third consecutive session, under pressure from expectations that the Fed will slow down the pace of interest rate hikes.

This can be confirmed by tomorrow’s US inflation statistics if they match the forecasts or if they deviate towards even lower values. (Moscow Bureau)


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