Russia: a brief market watch

RUSSIA ECONOMICS - In Brief 14 Mar 2024 by Evgeny Gavrilenkov

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The ruble recently fluctuated within a relatively wide range (R/$ 90-93), and these fluctuations were driven mainly by local factors rather than fundamental trends. According to the CBR statistics, sales of hard currency by top exporters decreased in February from $12.9 bln to $10.4 bln. The latter can be explained by the efforts of the US authorities to tighten sanctions and prevent bypassing them. The new measures were introduced earlier this year. However, since then, the discount between Urals and Brent dropped to a minimum and, assuming stable oil price, one may expect more FX sales by the Russian exporters in the coming months. The fixed income market remained relatively stable, and the situation has not changed significantly. The Ministry of Finance keeps placing bonds on the primary market with a certain premium to the curve, which pushes yields up on the secondary market. Since the start of the year, the government has been able to raise almost R600 bln via OFZ issuance. Interestingly, from November 2023 to February 2024, the share of asset managers in the primary market grew to 52% on average (versus the average of 29% in 10M23). The latter illustrates that the market hopes for an early turning point of the CBR’s monetary policy, i.e., its easing. Despite the fact that the y-o-y inflation increased to 7.69% in February, the m-o-m inflation will start slowing soon. In February, inflation m-o-m was at 0.68% (higher than in February 2023 – 0.46%), but one can expect disinflation in March as in the seven days ending March 11, w-o-w inflation print was at 0.00%. The MTD inflation on that day was at 1.60%. Prices started to fall w-o-w within the broadening range of...