Potential upside risk to RUB likely from CBR

In the beginning of September Deputy Governor Ksenia Yudayeva said that the CBR might be offering FX in the market from its reserves if the Ministry of Finance starts to spend the sovereign funds too fast to cover budget expenses. This is rather strong news. So far, the Ministry of Finance has spent around RUB 1.3tn this year. 

The need for more funds traditionally increases towards the end of the year. This might require utilisation of additional reserve funds and, as a result, the CBR may provide significant support for the RUB. 

"Clearly, if the RUB starts to increase, then the CBR may be more dovish and this will offset the positive factors, but we still have to take into account these scenarios. Thus, answering the question as to whether the RUB has any upside, we should say yes, but, the oil market will remain the pillar of our forecast. Taking into account all mentioned above, our 3-month USD/RUB forecast remains unchanged at 62", said Nordea Bank in a research note on Thursday.