The ruble reacted modestly to the increase in the exchange rate and the Central Bank’s innovations, the profitability of OFZ increased

MOSCOW, Jul 21 (Reuters) – The ruble showed little change in narrow ranges on Friday afternoon amid low activity in the local market, while showing modest reaction to the results of the CBR board of directors and subsequent decisions by the regulator, while the central bank’s tough tone and a 100 basis point rise in the main interest rate put pressure on the ruble government debt market.

At 14:40 Moscow time, the dollar/ruble was trading at 90.24 tomorrow, close to Thursday’s close.

The exchange rate of the euro/ruble pair was then 100.45, and here the ruble gains less than 0.1%.

Compared to the yuan, the ruble is up 0.1%, the quotation is close to 12.56.

In the first half of trading, the ruble fell to session lows of 91.72 to the dollar, 101.03 to the euro and 12.56 to the yuan, mainly due to risk-free positioning towards the weekend and attention to the news agenda.

The Central Bank of Russia on Friday, guided by the results of the board, decided to raise the main interest rate by 100 basis points to 8.50% per annum, contrary to the consensus that expected a more modest step of 50 basis points, and also significantly raised the forecast of the average main interest rate.

The ruble public debt market showed a more significant reaction to the Central Bank’s decision – the near end of the sovereign curve is rising by 4-9 basis points, the middle and far ends are still moving away from the 11% mark per year.

“Until the market anchors expectations for a key rate high in a new uptrend cycle, OFZ will remain under pressure,” said Dmitry Monastyrshin of Promsvyazbank.

The Bank of Russia also announced today its intention to start selling/buying foreign currency related to investing funds from the National Welfare Fund (NWF) in ruble financial assets from August 1, in addition to regular interventions under the budget rule.

According to Yevgeny Suvorov from CentroCreditBank, this is “very good news for the ruble” – the daily volume of foreign currency sales will increase by 2.3 billion rubles a day (at the current exchange rate, the volume of such transactions is about USD 25 million a day).

(Moscow office)