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RUB Buoyed by Firm Oil Markets, Hawkish CBR & De-Dollaristaion Push

RUSSIA
  • USD/RUB opens mostly flat, having traded sideways in yesterday's session despite broad USD strength on robust jobs data.
  • RUB outperformed peers ZAR & TRY yesterday, buoyed by bullish momentum in oil markets (now >$70/bbl) on an upgraded demand outlook and signs of further de-dollarisation to cushion Russia against possible US sanctions – belying possible concerns about the upcoming Putin-Biden Summit (16 June).
  • Domestically, we see a raft of data coming out this afternoon – including a large uptick in retail sales to 31.5%, adding weight to the CBR's assertions of a robust demand-driven recovery.
  • Despite Nabiullina saying to was too soon to call its decision next Friday, MPC members alluded to 25-50bp of hikes in the pipeline and a cautious mindset.
  • Given the CBR's projections for a rise in CPI towards 5.7-5.9% and more sustained price pressure in the summer before abating in the back end of the year, the CBR may look to go for the more aggressive approach to decisively anchor expectations and add downside pressure on prices.
  • 3x6 FRA-Mosprime spreads still pricing in 81bp of hikes today after pulling back from 89bp yesterday.
  • Nevertheless, a hawkish CBR should continue to support RUB in the coming sessions.
  • Intraday Sup1: 73.2003, Sup2: 73.0263, Res1: 73.3652, Res2: 73.5483
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com
MNI London Bureau | +44 020-3983-7894 | murray.nichol@marketnews.com

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