Traders Bet on Russia Rate Cut 1st Time in 6 Months; Ruble Falls

Investors are betting for the first time in six months the Russian central bank will cut interest rates this month, forward-rate agreements show. The ruble weakened.

The ruble depreciated less than 0.1 percent to 31.345 per dollar and 40.685 per euro by 4:55 p.m. in Moscow. The currency was little changed at 35.5507 against the central bank’s euro- dollar basket.

Three-month forward-rate agreements traded at 7.3 percent today, 0.08 percentage point lower than the MosPrime rate, according to data compiled by Bloomberg. This indicates traders are pricing in an 8 basis points cut in rates over the next three months, the first time the data indicated a reduction since April. Bank Rossii is due to review interest rates in the first ten days of November.

The ruble has depreciated 7.5 percent from this year’s peak of 28.9925 per dollar reached on March 26 when oil traded $2.74 from a high of $109.77 a barrel, data compiled by Bloomberg show. Urals, Russia’s export blend of crude, traded up 1 percent at $108.21 a barrel.

Non-deliverable forwards showed the ruble at 31.8393 per dollar in three months.

The central bank is likely to leave the refinancing rate on hold at 8.25 percent, according to a median estimate of 19 economists surveyed by Bloomberg.

The inflation rate rose to an annual 6.6 percent in September. It likely remained unchanged in October, according to Bank of America Merrill Lynch’s chief economist in Moscow Vladimir Osakovsky.

To contact the reporter on this story: Maria Levitov in London at mlevitov@bloomberg.net

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

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