Russian stock market significantly surged following Central Bank's decision on key interest rate
Heya! Listen up, here's the lowdown:
The Moscow Stock Exchange (MOEX) index just hit a high of 2,900 points, adding nearly 1.3% to its previous close. This is a big deal, it's the first time since May 19, 2025, that this has happened.
Most of the indices on MOEX are riding high. For example, the RGBI index, which is a government index, started to recover from its morning dip and is now above 112.1. The ruble is holding steady, moving the CNY/RUB exchange rate up to 11, and the 3-month futures exchange rate for USD/RUB to 79.5.
Oil, after an early dip, immediately shot back up to $65.3 a barrel for the Brent mark after the Central Bank's interest rate decision. The big winners on the exchange today are Positive, Etalon, and Tatneft-up, which all saw gains of around 3.2%, 2.6%, and 1.4% respectively.
It's worth noting that, before the regulator's decision on the interest rate, the Russian stock market was also demonstrating a moderate increase of about 0.6%. But as soon as the decision was announced, the index took a quick dive of up to 0.7%, before bouncing back and continuing its rapid rise.
Expert opinion is that, despite the possibility of market change due to high volatility, a lower key interest rate is a clear positive for the Russian stock market, which has been trading at a discount to historical evaluations for the past three years.
In the long-term bond market, analysts expect further declines in yields on long-term bonds (over 10 years) and OFZ bonds within the next 12 months to around 12.5%.
As previously reported by "Monocle", on June 6, 2025, the Bank of Russia's board of directors, despite experts' expectations, lowered the key interest rate by 100 basis points to 20% per year - this is the first such reduction in the last three years.
The next meeting of the Bank of Russia's board of directors, where the rate decision will be discussed, is scheduled for July 25, 2025.
P.S. Some extra tidbits: According to updated figures from MOEX as of 14:30 Moscow time on June 18, 2025, the MOEX index was shown to be rising by around 1%, reaching 2,765.04 points. Despite fluctuations, the MOEX index showed a slight upward trend shortly after the rate cut, indicating a positive market reaction or at least some stabilization. However, the overall trend for the year remains negative, with a year-to-date decrease of about 1.33% and losses of around 18.93% since the beginning of 2025.
- In light of the Moscow Stock Exchange (MOEX) index reaching a high of 2,900 points and expert opinion suggesting a lower key interest rate is a positive for the Russian stock market, an individual might consider investing in the stock-market for potential future gains.
- For those interested in long-term investments, analysts anticipate further declines in yields on long-term bonds (over 10 years) and OFZ bonds within the next 12 months, making it an attractive option for finance-focused investors.
