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Ruble Strengthens as Bank Rossii Extends Dollar Buying

The ruble traded six kopeks from its strongest level in eight months versus the dollar as Russia’s central bank said it had been continuing interventions to curb gains in the currency.

The ruble added 0.2 percent to 30.2540 per dollar by 11:50 p.m. in Moscow, after closing at 30.1910 Jan. 10, the highest level since May 11. The currency added less than 0.1 percent to 40.4450 per euro and strengthened 0.1 percent to 34.84 against the central bank’s dollar-euro basket, gaining for the first time in four trading days.

Russia’s currency has rallied as oil, the country’s main export, climbs on optimism the economies of China and the U.S. are recovering. Crude is up 2.5 percent this year. Russia’s central bank has bought 15.1 billion rubles ($499 million) of foreign currency since 2013 trading started Jan. 8 to stem the ruble’s advance after abstaining from interventions in December, according to Bank Rossii data.

“The central bank is fighting the strengthening ruble as oil prices climb,” Dmitry Dudkin, head of fixed-income analysis at UralSib Financial Corp., said by phone from Moscow.

While Russia’s central bank is shifting toward targeting inflation instead of the exchange rate to manage monetary policy, the central bank will still intervene to curb volatility that can hurt the competitiveness of the nation’s exporters, First Deputy Chairman Alexei Ulyukayev said in October. The regulator aims to move to inflation-targeting by 2015, according to its annual monetary strategy report.

Bank Rossii purchased 5.15 billion rubles of currency for settlement Jan. 11 compared with 4.83 billion rubles the day before, it said today.

Rates Meeting

While the ruble’s trading hours were extended to 11:50 p.m. last week, policy makers won’t buy and sell dollars and euros to influence the currency’s movements beyond 7 p.m., according to a Jan. 9 statement.

Bank Rossii wants to hold inflation between 5 percent to 6 percent this year and 4 percent to 5 percent in 2014. Price growth quickened to 6.6 percent in December from a year earlier after remaining at 6.5 percent in the previous two months. Russian policy makers will probably leave interest rates unchanged at a meeting in Moscow tomorrow, according to a Bloomberg survey of economists.

Speculation that the ruble debt market will be opened this year to direct settlement for foreigners via systems including Euroclear Bank SA and Clearstream International SA have also lifted demand for Russia’s currency, Ivan Sinelnikov, an analyst for OAO Gazprombank said Jan. 11.

Yields on the country’s ruble-denominated government bonds, known as OFZs, may fall 50 to 80 basis points in 2013, Renaissance Capital Chief Economist Ivan Tchakarov wrote in an e-mailed note.

Ruble bonds have returned 1.12 percent this year, compared with 0.39 percent for Brazil’s debt, 1.36 percent for India’s and a negative return of 0.03 percent for China’s bonds, according to JPMorgan Chase & Co. indexes.

The extra yield investors demand to own Russia’s dollar bonds over U.S. Treasuries fell five basis points, or 0.05 percentage point, to 158 basis points, according to JPMorgan Chase & Co.’s EMBI Global Index. An index of five-year government yields rose four basis points to 6.2871 percent.

To contact the reporter on this story: Anatoly Temkin in St. Petersburg at atemkin@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; Gavin Serkin at gserkin@bloomberg.net

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