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. Last Updated: 07/27/2016

VTB Opens Index for Currency Speculators

MTVTB opened a currency index that will replicate the dollar/ruble spot rate. ��
VTB Capital, the investment banking unit of Russia's second-largest lender, started an index for foreign investors to bet on the ruble on expectation that the currency may have further to fall, chief strategist Ivan Ivanchenko said in an interview Thursday.

The VTB Capital Ruble Index, or RUBIN, will replicate the dollar-ruble spot rate on the MICEX Index, though with fewer restrictions on trading hours and currency trading, Ivanchenko said.

"Another round of depreciation may occur," he said. "We may see some unpleasant surprises for long ruble position-holders in summer."

Since tumbling 34 percent against the dollar between August and January, Russia's managed currency has strengthened 6.9 percent as the Central Bank raised interest rates and reduced loans to banks to starve speculators of cash to bet on further devaluation. The Central Bank pledged on Jan. 22 to prevent the ruble from weakening beyond a level of 41 against its dollar/euro basket used to manage fluctuations unless oil prices fall to and remain at $30 a barrel.

The ruble snapped a three-day decline against the dollar on Thursday, strengthening 0.1 percent to 33.62 per dollar and gaining 0.6 percent to 38.39 versus the basket.

Buyers of the VTB Index would be betting on depreciation because it is modeled on the dollar strengthening.

A current account deficit and further global shocks could result in "pressures piling up on the ruble," he said. Russia's current account, the broadest measure of trade in goods and services, may not stay in surplus as declining consumer demand subdues demand for imports, Ivanchenko said.