Rouble steadies near 104 vs dollar, volatile OFZ bonds resume trading

A view reveals Russian rouble cash on this illustration image taken March 25, 2021. REUTERS/Maxim Shemetov/Illustration

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March 21 (Reuters) – The Russian rouble steadied close to 104 to the greenback on Monday and OFZ treasury bonds returned to buying and selling in risky trend, whereas traders saved an eye fixed on Russia’s means to service state debt and pay coupon on its Eurobond.

By 1222 GMT, the rouble gained 0.4% to 104.50 in opposition to the greenback and had misplaced 0.4% to commerce at 115.23 versus the euro .

The bond market was specializing in clues on Russia’s state funds because the nation appears to be like to regularly resume operations on its monetary markets.

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On Monday, Russia has to pay a $65.6 million coupon to holders of its 2029 Eurobond however the finance ministry has the suitable to pay collectors in roubles if they’d requested to obtain their curiosity within the Russian foreign money.

Yields on the 2029 paper , which transfer inversely with their costs, stood at 43% in contrast with 4.5% seen a month in the past earlier than Russia began what it calls a “particular operation” in Ukraine.

Regardless of mounting issues about Russia’s means to service debt, it paid coupons on two Eurobonds in {dollars} final week, that means it has averted what would have been its first exterior bond default in a century. learn extra


The central financial institution stated it might start shopping for OFZ bonds when the Moscow Alternate resumed buying and selling these papers on Monday, hoping to restrict volatility, because it additionally held its key rate of interest at 20% final week after an emergency charge hike in late February. learn extra

Costs on some rouble-denominated OFZ bonds tumbled by a 3rd in pre-market commerce earlier than buying and selling on the principle session resumed at 1000 GMT, Moscow Alternate knowledge confirmed.

However the central financial institution’s shopping for of OFZ bonds saved them from falling additional, market gamers stated.

The central financial institution put bids for a few of OFZ collection of 80 billion roubles to 120 billion roubles ($0.77-1.15 billion), asset managers at Locko Make investments agency stated in a observe.

“That is rather a lot,” they stated.

The yield on Russia’s benchmark 10-year OFZ bonds, rose to a document 19.74% in pre-market buying and selling, earlier than settling close to 13.9% in the principle buying and selling session, Refinitiv Eikon knowledge confirmed.

The central financial institution’s intervention available on the market ought to present further liquidity to the banking system and assist the bond curve regulate to the brand new atmosphere, SOVA Capital stated in a observe, with short-term charges remaining shut however above the present key charge of 20% and the curve being inverted.

Russian banks would be the predominant gamers on the OFZ market whereas non-residents will search to exit the market to the extent doable because the papers, which international traders used to love due to interesting yields, have been excluded from international indexes, VTB Capital stated .

For now, gross sales of OFZ bonds by non-residents, who owned 19.1% of all such bonds as of early February, won’t be authorised between March 21 and April 1, Moscow Alternate stated on Monday.

These traders can be in a position conduct repo and spinoff transactions and, when inventory market buying and selling resumes, purchase securities to shut their quick positions, however not promote beforehand bought securities, the bourse stated.

Shares and bonds final traded on the Moscow Alternate on Feb. 25. The central financial institution subsequently curbed buying and selling as Western sanctions over occasions in Ukraine threw markets into turmoil.

The financial institution has but to say when buying and selling in devices like shares can resume, because it appears to be like for methods to clear a backlog of transactions whereas avoiding a market collapse. However a restricted variety of monetary market operations have been permitted to renew over the following two weeks.

In a while Monday, Russia’s decrease home of parliament will focus on the nomination of Central Financial institution Governor Elvira Nabiullina for one more time period by President Vladimir Putin.

($1 = 104.8520 roubles)

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Reporting by Reuters
Enhancing by Mark Heinrich, Angus MacSwan and Chizu Nomiyama

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