Ruble Gains to Strongest in 3 Weeks on Oil as Auction Sells Out

The ruble rose to its strongest level in three weeks and Russia sold all the 10-year bonds it offered at an auction as rising crude prices boosted appetite for the currency of the world’s biggest energy exporter.

The ruble appreciated 0.2 percent against Bank Rossii’s basket of dollars and euros to 37.0849 by 1:26 p.m. in Moscow, the strongest since June 18 on a closing basis. The yield on benchmark OFZs due February 2027 increased one basis point, or 0.01 percentage point, to 7.80 percent.

Brent oil gained 0.3 percent in London at $108.14 per barrel. The Finance Ministry sold all 10 billion rubles ($303 million) of bonds due 2023 it offered at an auction today with an average yield of 7.39 percent compared with guidance of 7.38 percent to 7.43 percent.

“So far it all looks not bad for the ruble,” Dmitry Polevoy, an economist for Russia and Kazakhstan at ING Groep in Moscow, said in e-mailed note. “Support from the rising commodities prices is an important factor.”

The Finance Ministry plans to offer 10 billion rubles of OFZ bonds due January 2018 at a proposed yield of 6.60 percent to 6.65 percent at an auction later today.

An index of emerging-market currencies compiled by Bloomberg rose 0.1 percent to 93.33. Bank Rossii may loosen monetary policy at its next meeting with a 25 basis-point cut to short-term rates after inflation slowed in June, Morgan Stanley analysts said July 8.

Fundamental Weakness

The ruble strengthened 0.3 percent against the dollar to 32.9080 and advanced 0.1 percent against the euro to 42.1800. While the ruble is the third-best performer among 24 emerging currencies tracked by Bloomberg today against the dollar, it’s down about 7.6 percent this year.

U.S. Federal Reserve Chairman Ben S. Bernanke speaks today and the Federal Open Market Committee publishes minutes from its June meeting, which may hurt the ruble’s gains, according to Polevoy. Markets slid on June 20 after comments by Bernanke that the central bank may wind down its bond buying if the economy performs in line with projections.

“It’s too early to talk of a final turnaround in the ruble trend,” Polevoy said. “Fundamentally the ruble is weak.”

To contact the reporter on this story: Vladimir Kuznetsov in Moscow at vkuznetsov2@bloomberg.net

To contact the editor responsible for this story: Wojciech Moskwa at wmoskwa@bloomberg.net

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