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Alba Iulia
Thursday, April 9, 2020

Rising oil prices raise the ruble and Russian stocks

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The Russian economy has been shaken by the coronavirus trigger, and the breach of the OPEC + oil production pact between Russia and Saudi Arabia. The turmoil shocked traders around the world and resulted in high volatility on the Russian stock markets and fluctuations in the value of the ruble – both of which have fallen by around 20% since the start of the year.

Latest market news, starting at 11:00 am Moscow time on March 20:

– After days of heavy losses, the Russian ruble strengthened overnight, falling from one of its lowest levels ever recorded. The ruble was trading at 77.5 – up 2% – against the US dollar on Friday morning in Moscow. The benchmark Brent crude oil, rising above $ 30 a barrel, helped support energy-dependent currencies like Russia.

– Volatility is expected to remain high, traders awaiting a crisis meeting of the Central Bank of Russia Friday afternoon. Market consensus is that the Bank will maintain rates at their current level of 6%, although Elvira Nabillina’s statement is being watched closely to see how the Bank views the economic benefits of the coronavirus. The Bank will face a huge conundrum in the weeks and months to come as to how to support the Russian economy without causing further devaluations of the ruble and inflation.

– The Russian stock markets were also in the green, the RTS index increasing by more than 7% and the MOEX index by 5%. Aeroflot recovered a whopping 14% of its share price, while energy majors and retailers also posted solid performances.

– While Russian energy companies have “once again” been saved by the interventions of the Russian government, producers have not yet emerged from the woods, said VTB Capital in its research note on Friday morning. “The tremendous loss of $ 123 billion in annual oil revenues is shared among many parties: the budget, the crude producers, the refineries, the customers and even the people. However, the loss is heavy and, although limited and sustained, the Russian oil industry is likely to face difficult times ahead. “

March 19, Mosocw closing:

– The ruble fluctuated up and down throughout the day, but closed the trading session in Moscow where it started – 80.5 against the US dollar. This corresponds to the levels last observed during the 2016 financial crisis and the lowest level of the ruble against the dollar since it was renamed following the 1998 financial crisis in Russia.

– The central bank of Russia has announced more details on its measures to stop the collapse of the currency and increase its sales of foreign currency – the logic being that higher demand for rubles may maintain its value. The regulator also shared more details on how it will use the proceeds from the sale of its stake in Sberbank to the Russian Ministry of Finance to increase its ruble purchase program.

– The Russian stock markets recorded one of their best days in recent weeks, with an RTS index up 6%. Measurement news support Russian oil companies, during the period of low prices, helped energy companies to climb in double digits.

March 19, Moscow open:

– The Russian ruble remains at its lowest level in five years, after crossing the benchmark rate of 80 against the US dollar. Overnight, the currency fell to 82.7, before climbing slightly to 80.5 with the start of trading in Moscow. This represents a 32% depreciation since the start of the year.

– Traders do not expect the currency to stabilize anytime soon. The ruble is already the weakest performer this year, and the futures market has it as the second most volatile currency in the next three months, according to the RBC economic site. reported Thursday. Faced with enormous economic uncertainty, the US dollar is now stronger than it has ever been, calculated by reading the trade-weighted index.

– Russian stock markets, however, were stable at the start, with the RTS and MOEX showing little movement from Wednesday’s close level.

– However, the readings were only offset by large fluctuations in the stock price in opposite directions. Retailers as Lenta and Magnit saw their share prices jump, while the national airline Aeroflot lost another 7%. A child of the poster for the coronavirus stroke, just a month ago, Aeroflot was worth $ 2.2 billion, the latest plunge brings its market capitalization below $ 750 million.

March 18, Moscow closed:

– The Russian ruble has fallen to its lowest level in five years, the economic fallout from the coronavirus continuing to weigh on the Russian financial markets. The ruble slipped to 79.8 against the US dollar Wednesday night in Moscow, causing the currency to fall by more than 25% for the year to date.

– The plunge occurred while oil prices – which have a significant impact on the Russian economy – also fell to their lowest level since the price crisis of 2014-2016. Brent crude was below $ 27 a barrel. He started the year at $ 66.

– The RTS index denominated in Russian dollars lost more than 9% on Wednesday, while the MOEX index, calculated in rubles, fell by 3%.

– Analysts have refined their assessments of the severity of the economic costs of coronavirus worldwide. Deutsche Bank warned of “a serious global recession” with “a drop in GDP growth … to exceed anything that had been recorded since at least the Second World War”.

– Russia’s economic response to the crisis remains moderate compared to the huge bailouts described in the United States and Europe. All eyes are on a crucial meeting of the Central Bank on Friday in Moscow, while Governor Elvira Nabiullina will assess how to react to the economic turmoil, the decline in the currency and the rising outlook for inflation.

March 18, Moscow open:

– The ruble slipped strongly overnight, trading at 76.8 against the US dollar on Wednesday morning in Moscow. Analysts say the gigantic stimulus package triggered by the United States and other developed economies around the world has accelerated a dollar-backed asset rush, with emerging market currencies suffering.

– The Russian stock markets were pushed back, resuming a bad trading session in Asia and eliminating the steam from a rebound in the US markets overnight. The RTS index fell more than 4% at the start, and the MOEX index lost more than 1%. The Russian national airline, Aeroflot, was one of the largest fallers, with fall which means the company lost half of its value – about $ 1 billion – in four weeks.

– The ruble’s woes have been compounded as oil prices started the day again in the red, with the benchmark Brent crude falling to nearly $ 28 a barrel, setting a new low never seen since January 2016. “The pressure on the oil market has been relentless, [and] risks remain down as we enter the second quarter, ”said Warren Patterson of ING. “The picture of demand continues to deteriorate as more and more countries put in place closings and travel restrictions that have seen airlines cut capacity. Meanwhile, the resumption of oil supplies from April after the breakdown of OPEC + talks means that these low prices should persist for a long time. The fall in prices will clearly harm oil-exporting countries. “

March 17, Moscow closed:

– After resuming in the morning, the ruble fell to fall below 75 against the US dollar. A $ 1 bill would bring you 75.2 rubles on the money markets on Tuesday evening. The daily decline of 1% would be great news for a number of other days, but following huge volatility in the past two weeks, traders may view today’s move as a sign of stability.

– The Russian stock markets also reversed their previous bullish trend, retreating in afternoon trading. The RTS index, denominated in rubles, is down 4.3% for the day and the MOEX index drops 2.8%. The LSR construction group fell more than 10%, followed by the retailer Detskiy Mir and the financial services group Tinkoff.

– Brent crude oil fell back below $ 30 a barrel Tuesday afternoon.

– “The situation remains tense because the pandemic in Western economies has not yet reached its peak – and that may be the start,” said Sergei Suverov, analyst at BCS Premier. “Now the main question is whether the authorities will be able to help with large-scale anti-crisis stimulus measures to prevent massive bankruptcies.”

March 17, Moscow open:

– The markets were moderated on Tuesday morning, the enormous movements overnight which characterized the exchanges during the last weeks could not have materialized. The calm comes after a new bloodbath on Wall Street on Monday, where stocks fell 12% in the worst daily performance in 33 years. “The Federal Reserve’s emergency move on Sunday apparently did not impress the markets on Monday, as investors questioned the effectiveness of monetary policy in fighting the virus epidemic,” wrote Maxim Korovin of VTB Capital. in his research note to customers on Tuesday.

– The ruble gained almost 1% overnight, trading at 74 against the US dollar.

– Russian stock markets posted modest but stable gains, offsetting some of yesterday’s losses. The dollar-denominated RTS index rose 1.6% to 982 points in the opening minutes of Tuesday’s trading, while the ruble MOEX index climbed to the same extent, rising above 2,300. Blue chips Gazprom, Sberbank and Sistema were at the top of the ranking.

– Brent crude oil also shot up overnight, slightly above the benchmark price of $ 30 a barrel that traders have set since collapse of the OPEC + agreement in early March.

March 16, Moscow closed:

– The ruble fell again on Monday, down 2.5% to start the week, trading at 74.2 against the US dollar. Earlier in the day, the currency hit the benchmark of 75 per dollar.

– The Russian stock market also lost 5%, as global stocks fell following an emergency rate cut announced on Sunday by the US Federal Reserve. The RTS index, denominated in dollars, stands at 938 points (-5.4%), while the index based on the ruble MOEX Index was 2,216 (-4.3%).

– Oil slid to a new low of several years, with Brent crude falling 10% below $ 31 a barrel. Edward Moya, analyst at OANDA, said: “The worst oil scenario seems to be coming to pass. The coronavirus is crippling economies around the world and no one knows how bad it will get. You can basically start to assess a complete collapse in demand for crude oil in much of the world. “

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