Higher corporate debt puts pressure on RUB

After a substantial sell-off in December 2014 when the daily correlation between the rouble and the oil price in the short run vanished. The relationship has come back into the main picture as the price of Brent slid under USD55/bl. 

Danske Bank assumes this was because the impact of non-market factors on the rouble has disappeared, i.e. when large Russian state corporations were forced by non-market factors to sell as much as possible of their accrued FX revenues and the central bank opened large FX repo channels in order to help the corporate sector serve its outstanding FX debt earlier this year.

"Several factors are likely to weigh on the rouble in the near future. In H2 15, we do not exclude a build-up of long-positions in the USD/RUB by private consumers in order to hedge their savings, whether or not the price of Brent continues its path to USD40/bl. That Russia's corporate sector debt exceeds USD400bn (albeit with varying maturities) is still putting pressure on the RUB. We expect outstanding FX corporate debt repayments to rise in Q4 15, which, in our view, will bring back CBR's FX repo auctions to subdue pressure on the rouble", according to Danske Bank.