The ruble strengthened for the first time in four days against the dollar and bonds gained as oil rallied and better-than-expected economic data in Europe’s largest economies boosted the outlook for Russian exports.
The Russian currency appreciated less than 0.1 percent to 31.8350 per dollar as of 7 p.m. in Moscow. The ruble gained 0.2 percent to 39.2405 per euro and rose 0.2 percent against the central bank’s euro-dollar basket. The yield on the government’s ruble debt due March 2014 fell one basis point, or 0.01 percentage point, to 6.66 percent.
Oil, the country’s main revenue earner, added as much as $1.19 to $93.92 a barrel in New York. The U.S. Commerce Department reported retail sales advanced 0.8 percent, the first gain in four months and more than the 0.3 percent estimated by economists polled by Bloomberg. Germany’s gross domestic product rose 0.3 in the second quarter, beating estimates.
Investors pared bets on the ruble falling further, with non-deliverable forwards showing the currency slipping to 32.3325 in three months, versus 32.3765 per dollar yesterday.
While oil is a supportive factor for the ruble, the Russian currency hasn’t matched the rally in the commodity, Vladimir Kolychev, head of research at Societe Generale SA’s OAO Rosbank (ROSB) unit in Moscow, said by e-mail today.
This “probably speaks for the overall investor cautiousness toward the sustainability of the risk rally” in the ruble, he said. “In this context the ruble is likely to stay in close range near 35 against the by-currency basket with the European news flow remaining the major driver for the local currency.”
The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell six basis points, or 0.06 percentage point, to 222, according to JPMorgan Chase & Co.’s EMBI Global Index.
The finance ministry today said that it plans to sell 15 billion rubles of five-year OFZ bonds tomorrow with a yield between 7.57 percent and 7.62 percent.
“It was only logical to go for a shorter maturity given the slow mode of the holiday season and uncertain risk sentiment globally,” Kolychev said. “The yield guidance is close to where the market is at the moment.”
Kolychev said that placing up to two-thirds of the debt would be a good outcome for the auction.
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