Ruble Strengthens to Seven-Month High on Exporter Tax Payments
The ruble strengthened to its strongest level in seven months as optimism the global economic recovery will continue lifted demand for the currency of the world’s biggest energy exporter and on speculation exporters are buying rubles to pay taxes.
The ruble appreciated 1 percent to 28.9925 per dollar at the 7 p.m. close in Moscow, its best level since Aug. 31. The country’s 138 billion rubles ($4.7 billion) of domestic OFZ notes due July 2015 rose, pushing yields down five basis points, or 0.05 percentage point, to 7.12 percent.
German business confidence unexpectedly climbed to an eight-month high in March, signaling demand for Russian exports may rally in Europe. Russia’s natural-resource companies are due to pay the government as much as 700 billion rubles ($24 billion) in quarterly taxes, according to Sergey Fishgoyt, deputy head of foreign exchange at Otkritie Bank in Moscow.
“Locally tax payments have driven overnight interest higher, and companies are selling dollars for rubles to get money to pay into the budget,” Sergey Romanchuk, head of foreign exchange and money markets at OAO AKB Metalinvest Bank in Moscow, said by e-mail. “Foreign investors also seem to be adding to ruble positions.”
The overnight MosPrime rate banks say they charge to lend to each other in rubles jumped 52 basis points to 5.8 percent, the highest level since Jan. 30.
“High oil prices are keeping speculators happy in the ruble carry trade,” Fishgoyt said by e-mail. “There’s no reasons for a falling ruble at the moment no matter how many dollars the central bank is buying.”
Bank Rossii manages the ruble within a so-called “floating corridor” against a basket of dollars and euros to limit swings that erode exporters’ competitiveness. The current level against the basket implies the bank may be buying about $250 million a day in other currencies against the ruble, Fishgoyt said.
Urals crude oil, Russia’s chief export, has risen 15 percent to $121.60 per barrel in 2012, heading for the biggest quarterly advance since March 2011. Oil and gas together provide about 17 percent of Russia’s gross domestic product and 50 percent of state revenue, according to government estimates.
High oil prices will probably mean the ruble continues to strengthen in the second quarter as investment in the Russian economy increases following the presidential election on March 4, Artem Gavrilov, head of foreign exchange, interest rates and money markets at Nomos Bank in Moscow, said by e-mail. The currency may weaken again in the third quarter, he said.
The ruble has gained 11 percent against the dollar in 2012, heading for the best quarterly rise since Bloomberg began compiling the data in 2003. Brazil’s real appreciated 2.7 percent over the same period, India’s rupee strengthened 4 percent and China’s yuan lost 0.1 percent, the data show.
Russia’s central bank expects capital inflows to begin this year after a new government is formed, Interfax reported, citing unidentified investors who met with Bank Rossii Deputy Chairman Sergey Shvetsov.
The central bank sees Russia ending 2012 with a net private capital inflow after outflows of an estimated $13.5 billion in January and $9 billion in February, Interfax reported, citing Shvetsov’s comments to possible Eurobond investors.
The ruble strengthened 0.9 percent to 38.6025 per euro and 0.9 percent to 33.317 against the central bank’s target dollar- euro basket. Investors pared bets on the currency weakening, with non-deliverable forwards showing the ruble at 29.3695 per dollar in three months, compared with expectations of 29.6863 per dollar on March 23.
Cost of Protection
The yield on Russia’s $2 billion of Eurobonds due 2015 dropped two basis points to 2.294 percent. 2015 dollar- denominated notes issued by OAO Sberbank, Russia’s largest lender, yielded 11 basis points less than on March 23 at 3.628 percent, while the yield on similar-maturity debt from state gas monopoly OAO Gazprom declined 14 basis points to 3.43 percent.
The cost of protecting Russian debt against non-payment for five years using credit-default swaps advanced one basis point to 179 basis points, down from last year’s peak of 338 on Oct. 4, according to data provider CMA, which is owned by CME Group Inc. and compiles prices quoted by dealers in the privately negotiated market.
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