The ruble gained, set for the best weekly rally since October 2011, as investors bet conciliatory comments by President Vladimir Putin on Ukaine reduced the chance of tougher sanctions. Bonds rose for a fourth day.
The currency added 0.1 percent to 41.0293 against the central bank’s target dollar-euro basket by 12:39 p.m. in Moscow, a 2.6 percent increase in the week and the strongest level since Feb. 14. Yields on ruble-denominated debt due in February 2027 fell 14 basis points to 9 percent, a record 67 basis-point decline in the week. Markets are closed for a public holiday tomorrow.
Investors are winding down bets the ruble will weaken, after Putin said yesterday that violence must stop for any dialogue to begin, and backed the presidential election that Ukraine has scheduled for May 25. Short positions have become more expensive to hold after the central bank’s 50 basis-point rate increase on April 25, according to ZAO VTB Capital analysts Maxim Korovin and Anton Nikitin.
“It looks like the major part of short ruble positions held by foreigners have not been unwound yet and the move in the ruble might go further to clear them off,” Korovin and Nikitin said in an e-mailed note.
The ruble rose 0.5 percent to 34.7490 versus the dollar and traded 0.3 percent stronger at 48.4465 per euro. Russia’s currency has lost 5.4 percent per dollar this year, the third-worst performance among 24 emerging-market currencies tracked by Bloomberg.
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