OFZ auction will show the level of confidence in the Russian market

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Futures on global stock indices rebounded by 0.2% and 1.7%, after declining the day before by 2-4% because of the threat of the extension of the trade war between the US and China. As we pointed out earlier, the trade war will begin to broadcast the devaluation of the yuan. However, the Bank of China is in no hurry to significantly devalue the yuan, in 2015, therefore, increased its exchange rate by 0.55% to 6.45 per dollar on Wednesday. At the same time, the regulator has stated that it is willing to use the levers of monetary policy in order to avoid the impact of external shocks.
This statement was supported by Asian markets. However, on the subject of a trade war, the dollar index jumped up to 95.3 points, where the last time was in July 2017. The dollar strengthened against leading currencies, including emerging currencies. Despite the recovery in oil prices from 72.6 to 75,4 per barrel, and rising net long positions of hedge funds on the ruble last week, according to CFTC reports, the ruble has declined against the dollar on Tuesday to 64.1 where the last time was in December 2016. But on Wednesday, the start of the OPEC seminar, where they will attend the energy Ministers of the countries of the cartel. Therefore, allegations may be made about the compromise on oil production at the level of 300-600 thousand b/d against previously announced 1.5 million b/d. This is already incorporated in the price of oil.
However, the support will be from the forecast API, according to which crude oil inventories declined over the week in the US 3 million barrels, although there is a rise in gasoline stocks. Against this background, the ruble strengthened against the dollar. Also, the approximation of tax payments plays in his favor. On the other hand, auctions for OFZ today will show the level of trust of investors to the Russian market. So, despite the investment rating from two international rating agencies, BBB – and BBB – from S&P and Fitch, – outflow of liquidity from Russian assets may continue. Because there are more profitable opportunities to invest on the local markets of South Korea, Romania, Indonesia, India and other countries.
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Viktor Veselov,
Chief analyst,
Bank “GLOBEKS”