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Ruble Gains for Third Day Amid Tax Payments as Crude Rallies

The ruble advanced for a third day as oil, Russia’s main export earner, rose and companies bought the local currency to pay taxes.

The ruble appreciated 0.1 percent to 37.7958 against the central bank’s euro-dollar basket by 6 p.m. in Moscow, when the central bank stops its market operations. The currency was little changed in the week. The yield on the government’s ruble bond due February 2027 dropped two basis points, or 0.02 percentage point, to 7.77 percent.

Brent oil rose for a sixth day in London, gaining 0.5 percent to $110.09 per barrel. The monthly tax period in Russia started yesterday and continues Aug. 20 with value-added tax payments. The central bank spent the equivalent of 13.26 billion rubles ($404 million) of foreign currency buying rubles on Aug. 14 compared with sales equal to 10.79 billion rubles the previous day, the regulator said on its website.

“People are buying before the VAT payments,” Vladimir Miklashevsky, a trading desk strategist at Danske Bank S/A in Helsinki, said by e-mail. “The central bank is helping.”

Bank Rossii buys and sells currency to curb volatility and reports the data with a lag. The VAT payments may see exporters buy as much as 140 billion rubles, according to an OAO Promsvyazbank note, published Aug. 14.

The ruble strengthened 0.2 percent against the dollar to 33.8200 for a 0.2 percent weekly gain. The Russian currency appreciated 0.1 percent against the euro to 43.8755, paring its loss in the week to 0.1 percent.

Dividend Payments

Large Russian companies like OAO Gazprom and OAO Rosneft are also supporting the ruble as they pay annual dividends, which include foreign-currency payments to holders of depositary receipts, according to VTB Capital and BCS Financial Group. Total payments in August may reach $6 billion, VTB said in a note Aug. 14.

“Next week we have Rosneft paying $600 million in dividends to non-residents,” Dmitry Dorofeev, strategist and trader at BCS in Moscow, said by e-mail. “This will support the dollar against the ruble.”

The Russian currency has declined 7.8 percent against the dollar-euro basket since the beginning of 2013. That compares with a 6.4 percent drop for JPMorgan Chase & Co.’s index of emerging-market currencies and a 4.1 percent increase for Brent oil.

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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