June 8 (Bloomberg) -- The ruble snapped a four-day drop against the euro as Bank Rossii said purchases of foreign currency won’t be increased to stem its appreciation.
Russia’s currency closed 0.3 percent stronger in Moscow at 40.55 per euro, its biggest one-day jump since May 11, according to data compiled by Bloomberg. The ruble was little changed at 27.7475 per dollar, after earlier touching a one-month high against the greenback.
The central bank doesn’t plan to increase interventions designed to limit gains in the ruble, Chairman Sergey Ignatiev told reporters after a meeting with Russian business leaders in Moscow today. Ignatiev also disputed comments by Alexander Shokhin, head of the Russian Union of Industrialists and Entrepreneurs, that the strengthening ruble hurts economic growth.
The ruble gained after “comments from central bank Governor Ignatiev that he disagrees with the statement excessive ruble strengthening is bad,” Denis Korshilov, head of foreign-exchange trading in Moscow at Citigroup Inc. said. “He also says that they will not increase interventions to keep the ruble from strengthening.”
Bank Rossii buys and sells dollars and euros to keep the ruble within a so-called “floating corridor” against a dollar-euro basket, which it targets to limit swings in the ruble that erode the competitiveness of Russian exporters. The currency was little changed at 33.5086 versus the basket today, from 33.5535 yesterday. The basket is made up of about 55 percent dollars and the rest euros.
Hurt by the Ruble
Shokin told reporters that Russia’s economy and businesses are being hurt by the ruble, which has gained more than 10 percent against the dollar so far this year, the biggest advance of the major emerging-market currencies tracked by Bloomberg. Ignatiev said Shokhin was “putting it a bit strongly,” at the same press conference.
The corridor spans 32.45 to 37.45 against the basket, First Deputy Chairman Alexei Ulyukayev said March 1. It has probably been shifted to 32.25 to 37.25 to accommodate the ruble’s gains, analysts at VTB Capital, the investment-banking arm of Russia’s second-largest lender, wrote in a client note today.
The World Bank expects the currency to be stable until the end of 2011 when it will trade around 28 per dollar, Zelko Bogetic, the Washington-based lender’s chief Russia economist, told reporters in Moscow today.
Russia’s only ruble-denominated Eurobond climbed the most since the government issued 50 billion rubles ($1.8 billion) more of the notes on May 19. The yield declined 12 basis points, or 0.12 percentage point, to 6.773 percent, the lowest since May 17. Dollar bonds due in 2020 rose for a fourth day, leaving the yield down four basis points at 4.498 percent, a seven-month low.
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