Ruble Gains on Oil as Ulyukayev Warns of ‘Currency War’

The ruble appreciated against the dollar in late Moscow trading as oil rallied in New York. Central banker Alexei Ulyukayev said leading economies are on the brink of a “currency war.”

Russia’s currency strengthened 0.1 percent to 30.3110 per dollar by 11:50 p.m. in Moscow, after earlier slipping as much as 0.5 percent. The ruble was little changed at 34.8094 against Bank Rossii’s dollar-euro basket, used by policy makers to smooth exchange-rate moves that crimp exporter competitiveness.

Crude, Russia’s biggest export earner, closed 1 percent higher at $94.24 a barrel in New York, the highest level since Sept. 18, as government data showed U.S. stockpiles fell more than expected last week. Other nations may follow Japan in devaluing their currencies to lift competition, hurting the global economy, First Deputy Chairman Ulyukayev told a conference in Moscow.

Russia has curbed interventions aimed at stemming ruble appreciation after buying 15.3 billion rubles ($503 million) of foreign currency since the start of the year.

“The central bank didn’t intervene in the market much for the last few days, which freed the ruble rate,” Anna Bogdyukevich, an Aton Capital analyst in Moscow, said by phone.

Bank Rossii, which manages the world’s fourth-largest stockpile of international reserves, didn’t intervene in December for the first month since at least August 2008, when the regulator started publishing the data.

‘More Flexible’

The ruble was little changed against the euro, sliding less than 0.1 percent to 40.3075. Yields on Russia’s generic 10-year ruble-denominated notes gained 13 basis points, or 0.13 percentage point, to 6.9541 percent, the highest since August.

“The ruble is now far more flexible” as the central bank moves toward toward targeting inflation instead of the exchange rate, Neil Shearing, chief emerging market economist at Capital Economics in London, wrote in an e-mailed note. “The ruble now moves broadly in line with changes in Russia’s overall balance- of-payment position, a key determinant of which remains the price of oil.”

Bank Rossii bought foreign currency at the start of the year to curb the ruble’s appreciation after the biggest jump in four months on the first day of trading Jan. 8. The regulator didn’t buy or sell currency Jan. 14, according to its most recent data.

The yen gained for a second day after touching its lowest level in two years against the dollar this week on bets the Bank of Japan (8301) will raise its 1 percent inflation target and introduce more monetary stimulus at its Jan. 21 to Jan. 22 meeting.

‘Weakening the Yen’

“Japan is weakening the yen and other countries may follow,” Bank Rossii’s Ulyukayev said.

South Korea’s won and the Philippine peso led Asian gains in 2012, prompting policy makers in the two nations to clamp down on the use of currency forwards in the fourth quarter. Taiwan’s central bank has intervened to weaken its dollar on most days in the past nine months, according to traders who asked not to be identified.

Indonesia’s central bank is supporting the rupiah in response to “out of proportion” concerns about the current- account deficit, Governor Darmin Nasution told reporters in Jakarta Jan. 11.

Brazil’s central bank has used currency derivatives to buy and sell dollars, fueling speculation policy makers are pursuing a currency-band policy to strike a balance between reviving the economy and stemming annual inflation.

To contact the reporters on this story: Anatoly Temkin in St. Petersburg at atemkin@bloomberg.net; Victoria Stilwell in New York at vstilwell1@bloomberg.net

To contact the editors responsible for this story: Emma O’Brien at eobrien6@bloomberg.net; James M. Gomez at jagomez@bloomberg.net

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