02 June 2004 17:11
DOLLAR MAY SLIDE TO 28.8 RUBLES IN JUNE - INTERFAX CEA
MOSCOW. June 1 (Interfax) - Russia's financial market should remain relatively stable in June with the dollar
sliding and the rate of inflation down, bringing real returns on many instruments, the Interfax Center for Economic
Analysis predicts.
Analysts say the dollar could dip to 28.8 rubles/$1 in June as large volumes of export earnings from a highly
favorable commodities market continue to put pressure on the currency market. In addition, the banking system has seen a
general drop in ruble liquidity over the past three months. The lack of sufficient ruble supply could influence
decisions on reducing earlier long positions on the dollar.
The money market should be fairly stable in June with loan rates
possibly edging down from the previous month. Analysts expect
The rate of dollar depreciation will depend on how ready the Central Bank of Russia is to support the dollar.
Recently, the Bank has shown its interest in maintaining a stable exchange rate and has bought dollars at just below 29
rubles/$1.
Dollar dynamics on the international Forex market could have some impact on the Russian market. If the dollar
continues to weaken against the euro, the Central Bank may bring down its dollar buy quotes. These are the tactics
envisaged by the new policy to quote the ruble against a dollar/euro basket of currencies, which the Central Bank
announced it could be transferring to.
High volumes of export earnings and Central Bank dollar buying to contain ruble growth will lead to a rise in gold
and foreign currency reserves. It is thought the reserves climbed by $1.5 billion to $2 billion in May and reached $85.5
billion-$86 billion.
improvement on this market because of increased dollar sales, which will make ruble resources less expensive.
The market is due to receive about 36.8 billion rubles on June 24 in the second part of reverse repo operations with
OFZ 46008. However, analysts do not expect rates to fall to the minimum levels seen at the beginning of the year.
Thus, ruble overnight credit rates will drop to 3-5% annually in June among large Russian banks and to 6-8% annually
among middle-sized banks, and they will only rise to 10-12% and 14-16% respectively, when hefty tax payments are made,
experts predict.
policy after the departure of Bella Zlatkis, who since the early
nineties has been one of the founders and curators of the GKO-OFZ
Ruble liquidity is expected to remain at a rather low level, partly thanks to the Central Bank, which considerably
lowered the rate of money supply growth this year. Considering also the slow down in tariff hikes for the population and
seasonal factors, analysts predict inflation will fall to 0.3% in June. Thus, June inflation will be just 3.7% of annual
inflation, making all financial market instruments, with the exception of the dollar, profitable taking into account the
predicted trends.
Another supporting factor for the significant rise in quotations
are bond issues by the Finance Ministry on the primary market. The
An upward trend should dominate the GKO-OFZ market as ruble liquidity picks up and due to the positive impact of the
currency market and forex bonds market, where the mood was negative in April - early May in anticipation of a U.S.
interest rate hike.
However, most players will probably prefer to keep demand down in anticipation of statements from the Finance
Ministry on market policy. Low liquidity at the end of the previous month could partly be attributed to uncertainty
regarding the Finance Ministry's further
market. Finance Ministry placements on the primary market may also hold back gains.
The corporate bonds market is likely to see slightly brisker
trading and a weak upward trend. Analysts say that at the end of May
Finance Ministry plans to hold four auctions in June to place OFZ bonds worth 24 billion rubles. Three auctions worth
18 billion rubles will be held on June 2 and an auction to place OFZ bonds worth 6 billion rubles will be held on June
16. The market will also receive 18.173 billion rubles this month, including 15.449 billion rubles on June 2 when OFZ
27013 bonds mature and the last coupon payments on this series are made, and 2.725 billion rubles on June 16 when coupon
payments on a number of OFZ series of bonds are made.
Russian forex bonds may edge up in June, while yield spreads between Russian bonds and U.S. Treasuries will narrow
slightly due to expected stability on the U.S. market and Russia's generally good economic and financial
situation.
The price of US Treasuries, which is used as a guide for the debt market in emerging market countries, currently
reflects the forecast rise of the U.S. economy and increase in U.S. interest rates. It is anticipated that the Federal
Reserve will raise the interest rate 0.25 points from the lowest level in 45 years to 1% already in June. In addition,
the publication of U.S. job statistics on June 4 could prove to have a major influence on quotation trends. The release
of unexpectedly good information on the U.S. labor market could influence the debt market.
many second tier bonds remained undervalued. The RUXCbonds-R index is expected to reach 114.7-115.2 points and the
RUXCbonds 161.3 to 161.9 points.
Analysts estimate the S&P/RUX Composite Index will range from 147
to 150 points by the end of the month. The RTS dollar index, in turn,
There will not be very much activity on the primary corporate bonds market. The combined volume of issues will most
likely stay between 4.5 billion - 5 billion rubles. This will also help activate the secondary segment.
There should be steady growth on the stock market and most blue chips may gain 6%-7% on average by the close of the
month.
The appeal of current blue chip prices, after tumbling in April and May, stability on international stock markets,
which are ready for U.S. interest rate rise, and high oil prices, should encourage an upward trend. However, uncertainty
over the fate of Yukos will hold back gains.
could reach 590-600 points by the end of June. The share price of United Energy Systems of Russia stocks could be
$0.26-$0.27, Lukoil could get $28-28.50 per share, and Gazprom could see 53-54 rubles per share.
[Interfax] |
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