The rouble have posted its biggest year-to-date gains in over 10 years, shrugging off increased geopolitical risks such as tougher sanctions against Russia
With Robert Mueller’s investigation is nearing its end, the rouble will clearly come under pressure in beginning of Q2, as sanctions over Russia’s alleged 2016 election meddling and other 100+ reasons are looming
The rouble climbed 6% against the dollar year-to-date, outpacing its global peers. Higher oil prices (+21% YTD), stronger demand for risky assets, as the Fed switched to a more dovish stance, and brighter prospects of the U.S. – China trade talks have fuelled the rebound
The first quarter has traditionally been a positive period for the rouble, given strong current account surplus, low external debt payments, substantial tax payments in March, particularly income tax payments that includeannual payments for 2018
March Outlook
The key tax payments in March that might have a material impact on the rouble could climb above 1.5 trln roubles, triggering a $7 bln FX-sell-off. Including insurance contributions , tax payments may rise above 2 trln roubles
March traditionally accounts for the bulk of tax payments, next biggest payments are expected in April and December
MinFin’s FX-buying in March may amount to 5–6% of the average daily FX-trading turnover and will have little impact on the rouble
By late March the rouble may technically strengthen to 65.1 due to substantial seasonal tax payments, assuming no new external pressure and stable oil prices