Ruble Strength ‘Inevitable’ as FX-Plan Discussed: Inside Russia

Russia’s currency advances for a fourth day versus the greenback and is poised to rally against the yuan for a 10th session as investors await a government decision on the parameters of FX-purchases.

* “Ruble appreciation is inevitable in the absence of interventions” as tax and dividend payments that may total 1.7 trillion rubles come due in the next 10 days, Iskander Lutsko, chief strategist at ITI Capital in Moscow, wrote in a note published late Tuesday

** The current exchange rate is a “catastrophe” for Russia’s budget and without interventions the ruble is likely to strengthen to 51 against the dollar and 8.1 versus the yuan

* Ruble strengthens 1.3% versus the dollar in Moscow trading to 54.7575, adds 1.7% against yuan to 8.1614 

* Yuan to become the “key reserve currency” for Russia amid the economy’s transformation, Lutsko said

** CNYRUB is close to record low and longs in the yuan versus the ruble at the current level should give more than a 30% return as purchases of at least $5b/month of “friendly” currencies under the new budget rule could see the rate in the range of 12-13 yuan

* Ruble +1.4% versus euro to 55.7925, rising sixth day

* 10-year benchmark ruble bond yields little changed at 8.46%

* Russia’s MOEX Index +0.9% to 2,090.00

* Brent crude -1.2% to $106.07 per barrel

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