Ruble Strengthens for Second Week Versus Dollar on Oil Gain

The ruble climbed, appreciating for a second week against the dollar as oil, Russia’s main export, rallied.

The Russian currency gained 0.3 percent to 32.5050 per dollar by the close in Moscow, taking its advance this week to 0.5 percent. The country’s $3 billion of Eurobonds due 2042 rose, cutting the yield by three basis points, or 0.03 percentage point, to 5.222 percent.

Brent crude advanced 0.8 percent to $97.84 per barrel after Abdalla El-Badri, secretary-general of the Organization of Petroleum Exporting Countries, said OPECs output would need to be reduced by 1.6 million barrels a day to keep within its target limit. Oil and gas together contribute about 50 percent of Russia’s state revenue, according to the government’s estimates.

Investors should buy the ruble against the dollar to profit from a temporary bounce in riskier assets after Greek elections on June 17, according to Bhanu Baweja, an emerging-market strategist at UBS AG in London. Currencies like the ruble may rally if Greek parties supporting a European bailout win the election, he wrote in an e-mailed note to clients.

“The risks are probably asymmetric for the ruble,” Vladimir Kolychev, chief economist at Societe Generale SA’s OAO Rosbank unit in Moscow, said by e-mail. In the event of a positive outcome from the Greek elections “we’ll avoid a catastrophe, but we’re still left in a world where growth is slowing down across the globe,” he said.

Rates on Hold

The ruble was little changed at 41.0390 per euro and gained 0.2 percent to 36.3453 against the central bank’s target dollar- euro basket. Investors pared bets on the currency weakening, with non-deliverable forwards showing the ruble at 33.0060 per dollar in three months, compared with expectations of 33.077 per dollar yesterday.

Russia left its benchmark refinancing rate unchanged for a sixth month at 8 percent today, according to a statement on the central bank’s website. Bank Rossii lowered the cost of currency swaps to 6.5 percent from 8 percent, effective June 18, the statement said.

“This should essentially put a cap on foreign-exchange swap rates on the market,” Rosbank (ROSB)’s Kolychev said. It’s “one more incremental step that shows stable interest rates are much more important for the central bank than currency volatility.”

To contact the reporter on this story: Jack Jordan in Moscow at jjordan22@bloomberg.net

To contact the editor responsible for this story: Gavin Serkin at gserkin@bloomberg.net