The ruble keeps plus, OFZ at auctions and CBR SD

MOSCOW, Jul 18 (Reuters) – The ruble remains moderately positive across all three key crosses through Tuesday evening, with oil trying to strengthen, risk-free positions closing, tax payments looming and expectations of the Central Bank tightening monetary policy on its side.

This set of factors now outweighs the pressure of geopolitical uncertainty (however, it has not gained weight in the last 24 hours) and local real demand for foreign currency, largely driven by Russian importers.

At 16.05 Moscow time, the dollar/ruble pair was at 90.80 with calculations “for tomorrow”, here the ruble gains 0.2%.

The euro/ruble pair was then traded at 102.06, and here the ruble gains less than 0.1%. In the morning it reached the lowest value against the euro since March last year, 102.61. Here, the dynamics are largely determined by changes in the currency market – the rise of the euro to new multi-month highs, followed by a pullback.

The ruble gained 0.4% against the yuan, the quote is close to 12.63.

Support for the ruble from Russian exporters could gradually increase over the next few weeks, given the unified payment of the July 28 tax, including the MET, where commodity companies typically increase sales of export earnings.

“Companies have to pay taxes next week and exporters should increase foreign exchange sales day by day,” said Alexei Antonov of Alor Broker.

According to Reuters calculations, the minerals extraction tax for crude oil in June 2023 increased by 2,515 rubles per ton (+14.0%) compared to May, reaching the maximum value since July last year, 13,274 rubles per ton.

Meanwhile, on foreign markets, oil is trying to rise after two days of declines, currently a barrel of Brent is valued at USD 78.58 (+0.1%).

The oil market halted its decline, triggered by poor Chinese statistics the day before, and it was supported by expectations for a reduction in crude oil and petroleum product inventories in the United States. Industry data will be released late in the evening, official tomorrow at 17.30 Moscow time.

In the forex market, the dollar index remains close to a 15-month low of 99.57, which was reached last Friday due to expectations that the Fed’s tightening cycle will soon end, largely driven by poor US inflation figures for June.

The dollar is currently trading at 99.86 against a basket of six currencies from 99.90 at Monday’s close.

The euro/dollar is trading at $1.1235, which is close to last Monday’s trading, having peaked at $1.1275 since February 28 last year.

Global markets expect the Fed to raise the dollar rate next week, but this is now expected to be the final stage in the current monetary policy tightening cycle, while the European Central Bank is expected to raise the euro rate multiple times.

In turn, Russian markets are waiting for an increase in the key CBR rate after Friday’s results of the Board of Directors of the Bank of Russia against the background of inflation risk and rising inflation expectations of the population, and some analysts allow a non-standard increase by a significant amount.

“The current consensus of analysts is to raise the CBR rate to 8.0%, by 50 bps, but taking into account the latest data, the CBR may raise the rate to 8.25%-8.50%,” believes Dmitry Monastyrshin from Promsvyazbank.

Formally, this is supposed to support the domestic currency, but at the same time it works against the ruble public debt market, where the profitability of many government securities has reached its maximum since autumn last year.

Expectations regarding tomorrow’s OFZ auctions may also put pressure on government securities. On Wednesday, the Ministry of Finance will offer unlimited classic papers PD-26241 and inflation papers IN-52005.

(Moscow office)