MOSCOW (Reuters) – The ruble is significantly depreciating in Friday trading, against the sale of risky and commodity assets after reports of a positive test for COVID-19 from US President Donald Trump.
Investors could also remember about the armed conflict between Azerbaijan and Armenia, which left the market radars in the middle of the week, but which today has become another reason to shift into safe assets before the weekend.
By 13.30 Moscow time, the quotes of the dollar / ruble pair with “tomorrow” settlements were at 78.68, the ruble was losing 1.7% from the level of the previous exchange close. Against the euro, the ruble depreciates by 1.4% to 92.17.
In the opinion of Promsvyazbank analysts, in the current situation the ruble will be quoted in the zone of 78-79 per dollar.
“We shouldn't reach 80 rubles per dollar,” said Alexei Antonov from Alor Broker, noting the ruble's negative reaction to the news background.
Trump tweeted on Friday that he and First Lady Melania Trump had tested positive for coronavirus.
“We will immediately begin the quarantine and recovery process,” Trump wrote.
Analysts believe this could negatively impact his campaign, but the medium-term implications for currencies are unclear. Against this background, the currencies of the EM segment and those tied to the export of raw materials are falling in price, in the positive are the safe US dollar and the Japanese yen.
Oil prices accelerated the decline after Trump's message about COVID-19 infection on Friday, current losses are approaching 5%, and Brent quotes – to $ 39 for the first time in 3.5 months.
The disease of the leader of the world's largest power with the coronavirus, and even on the eve of the presidential elections in the United States, itself is a source of market turbulence, but also serves as a vivid reminder to investors of the expansion of the pandemic and its negative consequences for global markets.
“Donald Trump's test has become an additional indicator that the second wave of the pandemic is on the verge, and the risks to the global economy lie on the side of repeating the spring scenario, albeit in a slightly more predictable form,” the Rosbank review says.
Earlier, the degree of optimism was also reduced by the lack of progress in promoting a new program of monetary support for the US economy due to the continuing disagreements between Democrats and Republicans regarding its volumes.
At the same time, the markets are waiting for the important US labor statistics coming out today at 15.30 Moscow time. According to a Reuters poll, the number of jobs in September outside the agricultural sector could have grown by 850,000 people against 1.37 million a month earlier, and analysts estimated the unemployment rate at 8.2% against the previous value of 8.4%.
The sale by the Bank of Russia of the remainder of the currency received from the sale of a controlling stake in Sberbank (MCX: SBER), as well as the expectation of foreign currency sales on the domestic market by Russian state-owned companies following a government directive, helped to smooth out the external negative to the ruble.
At the same time, the Central Bank from next week may increase the volume of sales of foreign currency within the framework of the budget rule.
According to a Reuters poll, the Ministry of Finance in October may allocate 86 billion rubles ($ 1.1 billion at the current exchange rate) for these purposes instead of the current 54 billion rubles [L8N2GT1KR], and in this case the total daily volume of currency sales by the regulator will reach 6.4 billion rubles against current 2.5 billion.
“In the medium term, our view on the ruble remains moderately positive, as foreign exchange sales by the Central Bank and the Ministry of Finance will increase in October, and the balance of payments indicators will slightly improve due to seasonality,” said Andrey Kadulin of Bank St. Petersburg.
(Vladimir Abramov. Editor Gleb Stolyarov)