Ruble Declines for Second Day as Fed Stimulus Effect Wanes

The ruble weakened for a second day as investors speculated a rally in the run-up to last week’s decision by the Federal Reserve to maintain stimulus measures was overdone.

The Russian currency depreciated 0.3 percent to 36.9846 against the central bank’s target dollar-euro basket by 1:23 p.m. in Moscow. The yield on 10-year ruble bonds rose two basis points, or 0.02 percentage point, to 7.26 percent.

The ruble strengthened 4.5 percent in the 10 days through Sept. 19, its longest rally on record. Fed Chairman Ben S. Bernanke unexpectedly left the central bank’s bond-buying program in place on Sept. 18, boosting appetite for riskier assets. An index of 20 emerging-market currencies, compiled by Bloomberg, retreated for a fourth day today, losing 0.1 percent to 94.07.

“The ruble recently got such a boost that it has become attractive to take profits and switch into dollars and euros,” Vladimir Miklashevsky, trading desk strategist at Danske Bank A/S (DANSKE) in Helsinki, said in e-mailed comments. “Expectations of the Fed’s tapering have not fully disappeared from the markets.”

The Federal Reserve will take the first step reducing $85 billion in monthly bond purchases in December, according to 59 percent of 41 economists in a Sept. 18-19 survey, compiled by Bloomberg.

Russia-dedicated bond funds saw their 17th consecutive week of outflows in the seven days ended Sept. 18, losing $44 million, OAO Gazprombank said Sept. 20, citing EPFR Global data. That pared the cumulative inflow into Russian funds since the beginning of the year to $55 million, Gazprombank said.

Bond Auctions

Russia’s currency weakened 0.5 percent against the euro to 43.1595 and declined 0.2 percent to 31.9520 against the dollar.

The Finance Ministry sold 2.96 billion rubles ($93 million) of 2019 bonds at an average yield of 6.95 percent out of 16 billion rubles offered, according to data compiled by Bloomberg. The ministry will offer 7.6 billion rubles of three-year bonds at 6.37 percent to 6.42 percent at an auction later today, according to a website statement.

Oil, Russia’s main export earner, gained 0.8 percent to $109.52 per barrel in London.

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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