Ruble Strengthens 3rd Day as Emerging Nations Bolster Currencies

The ruble strengthened for the third day as emerging-market countries announced steps to bolster their currencies, boosting appetite for riskier assets.

The ruble advanced 0.1 percent to 37.9870 against the central bank’s euro-dollar basket by 1 p.m. in Moscow, after appreciating to 37.9321 earlier. The yield on the government’s ruble debt due January 2023 was unchanged at 7.63 percent.

Brazil last week announced a $60 billion intervention program after the real swooned, while Indonesia said it will increase foreign-currency supply. Oil declined 0.2 percent to $110.84 per barrel in London after gaining 1 percent Aug. 23. The oil and natural-gas industries generate about 50 percent of Russia’s government revenue.

“The main reason for the ruble’s strengthening today is the concerted action of emerging markets’ central banks,” Dmitry Dorofeev, trader and analyst at BCS Financial Group said by e-mail. “Speculative outflows weakened across all emerging markets.”

The Russian central bank sold 13.26 billion rubles of foreign currency on Aug. 22, bringing the total amount spent since May 29 to almost 406 billion rubles ($12.3 billion).

The ruble appreciated 0.1 percent against the dollar to 32.9865 and gained 0.2 percent against the euro to 44.0995.

This week may be “trend-setting” for the ruble in the short term, VTB Capital analysts Maxim Korovin and Anton Nikitin said in an e-mailed note. While the ruble is weakened by companies converting rubles into foreign currency for dividend payments, the “fundamentals, namely oil, are supportive,” they said.

Companies including natural gas export monopoly OAO Gazprom may buy about $2 billion for dividends, the last significant outflow in the coming weeks, Dorofeev from BCS said.

“As a result, the ruble may strengthen significantly and reach the level of 37 versus the basket,” he added.

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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