The ruble wins back losses in view of MinFin’s OFZ bond auctions

According to Reuters, the ruble was able to recoup earlier losses due to recent events. This result was facilitated by the Ministry of Finance auctions on placement of treasury bonds, as well as the retreat of the basic Russian stock index from more than a month high.

In recent sessions, the ruble exchange rate has been supported by the end-of-month tax period, when exporters convert foreign-currency earnings into rubles to pay domestic tax obligations.

The Finance Ministry struggled to return to the domestic government debt market last month, but in just two weeks the Ministry of Finance managed to exceed its fourth-quarter borrowing plan of 150 billion rubles ($2.45 billion).

At its first auction on Wednesday, the ministry saw demand of 218.7 billion rubles for bonds with a floating coupon rate. Until last week, the ministry had not placed a float since November 2020.

Dmitry Polevoy, head of investment at Loko Invest, said that many banks have been asking the Ministry of Finance for floating assets for a long time — with their current risk profile, this is the safest asset for them. So the opportunity to buy a sufficient amount of securities at a certain discount to par has attracted investors.

The market is also looking forward to Friday, when the central bank is expected to end its rate-cutting cycle and thereby keep its key interest rate at 7.5%.