The ruble will focus on the activity of non-residents and OFZ
Expect positive opening of trading on the Russian market due to the easing positions of the U.S. Treasury to the company, against which there are sanctions, allowing him to enter into similar transactions with counterparties, which were until April 2018. The ruble will try to strengthen through the beginning of the tax period the payment of insurance premiums on Monday. Plus the failure of the CBR to buy currency before the end of this year will also support the ruble. The Bank of Russia has decided to pre-empt the risk of inflation – a rise in VAT, the weakening of the ruble, which was caused by non – monetary factors- the strengthening of the sanctions policy of the US against Russia, so the regulator increased the rate by 25 b.p. to 7.5%.
Although in the July press release predicted consumer prices will rise 3.5-4% at the end of 2018, but rising prices for food in August raised its full-year inflation to 3.1%, which slightly exceeded the upper limit of the Central Bank’s forecast. Was also increased the forecast for annual inflation for 2019 with 4% to 5-5. 5%, and this possibility was stipulated in the July press release by the bet.
Plus capital outflows from emerging markets due to the increasing rate of the Federal reserve and internal problems forced the Central Bank of Indonesia, India, Philippines, Mexico, Argentina, Turkey, etc. to raise interest rates to attract capital into its economy. The increase in rates have narrowed the spread between conventional and cross-currency swaps. However, we believe that now it is necessary to observe the reaction of the residents: either they use this opportunity to continue to sell OFZ bonds due to the approximation of the introduction of new sanctions against Russia, or remain for growth prospects in the key rate. Their behavior will depend on the dynamics of the ruble.