On Wednesday, banks made the bulk of tax payments (NDPI, excise taxes and VAT). In preparation for this event, the indicative rate of the interbank market MosPrime o/n has been growing all last week, having added about 20 bps, and since last Friday is at a level above the key rate of the Central Bank. On Wednesday, the rate continued to rise, amounting to 6.41% per annum. The need for ruble liquidity has spurred demand at the Federal Treasury’s repo auction. Thus, on Wednesday, the agency increased the limit at the o/n auction from 50 to 300 billion rubles, and the funds were raised in full. However, only one bank took part in the auction.

On the currency market, the ruble continued its strengthening, updating the next highs. In particular, in tandem with the dollar, the domestic currency was close to 61.5, and paired with the euro overcame the mark of 68.3. By the end of the working day, the ruble had slightly reduced its advantage, but maintained one of the best dynamics among currencies in emerging markets. In addition to large payments to the budget, oil prices continued to contribute to the growth of the ruble. However, we should not forget that the auctions took place at the reduced activity of market participants due to the weekend at the western venues.

It should be added that in December the next dividend period began, during which market participants accumulate ruble liquidity for payments, which contributes to the strengthening of the ruble. However, then part of the dividends paid by Russian companies will be converted into foreign currency by depository receipt issuers. In addition, part of the dividends will also be transferred to the currency by non-residents who own common shares. As a result of recent factors, the ruble may soon be under pressure.

Yuri Kravchenko, Head of Bank And Money Market Analysis at VELES Capital

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