Over the last week the dollar fell another 18 kopecks to 28.7 rubles to the dollar. “The renewed decline in the dollar versus other world currencies that began on Tuesday pushed commercial banks to increase their sales of export revenues. As a result, trading on the currency market reached record volumes, $2 billion on Wednesday,” recounts Ivan Manayenko, an analyst at Veles Capital Investment Company. The Central Bank remained the main purchaser of currency, keeping the dollar at the 28.785 mark. On Thursday, the CB also gave up and the dollar lost another 9 kopecks. Market players have no doubts that even with the Central Bank’s intervention the ruble will continue to grow stronger.
This week’s big event on the federal ruble bond market was the placement auction of OFZ bonds that took place on Wednesday. Out of a total issue of 18 billion rubles, investors purchased 13 billion and the premium on the secondary market was 80 base points. According to Dmitri Bogoslovsky, an analyst at Guta Bank, with this relatively high premium the Ministry of Finance demonstrated its interest in higher yields. This led to an increase in the market’s attractiveness and to a broader range of investors on the GKO-OFZ market. In expectation of the auction, sales predominated on the market and quotes on long-term bonds fell by 50-60 base points. In the second half of the week, quotes on state securities again began to grow with heavy trading.
The upward trend also continued on the corporate and federal bond market. Positive investor attitudes were buoyed by the further strengthening of the nominal ruble exchange rate and an abundance of ruble resources (the rate on the IBC market fluctuated between 0.5-1.1% p.a. and correspondent accounts reached 215 billion rubles). However, upcoming large placements of Moscow and Gazprom bonds to the tune of 15 billion rubles could dampen investors’ spirits somewhat.
Quotes on Russian Eurobonds did not change substantially this week, fluctuating around their earlier levels. “Traders are waiting for next week’s meeting of the US Federal Reserve Open Market Committee, when the new discount rate will be decided,” explains Alexander Kudrin, an analyst at Troika Dialog Investment Company. “At present the situation on all emerging markets is the same. All emerging market securities, including Russia’s, are taking their cues from US Treasuries and following them in price.”
The RTS Index finally broke the 600 mark, gaining 3.5%. Nonetheless, the market could not reach the record highs of October. “The massive amount of ruble liquidity in the banking system and low interest rates on debt instruments led to the increase in prices,” believes Artem Dziura, Director of the Securities Market Operations Division at Orgresbank. Regional telecom companies performed extremely confidently this week. Northwest Telecom shares gained approximately 20%, while Southern Telecom and Volga Telecom stock passed the 10-percent mark. Among the blue chips, RAO EES made impressive gains, growing by 7%. According to Sergei Drozdov, Director of Stock Management at Olimpiysky Bank, interest in stocks was spurred by Andrei Sharonov’s announcement that in the next two to three weeks, the government will determine the conditions for auctioning off wholesale generating companies (Rus. OGK). YUKOS shares fared worse than the rest of the market, losing 2%.

The Financier’s Date Book

January 27 Gazprom Board of Directors meets
January 28 Moscow places 5 billion rubles in bonds
January 28 US Open Market Committee meets
January 29 Tomsk Province places 0.5 billion in bonds
January 31 RAO EES Board of Directors meets
February 3 Gazprom places 10 billion rubles in bonds