The ruble weakened the most in more than a week and yields on Russia’s local debt rose as demand for the currency waned following the end of the monthly tax payment period.
The Russian currency depreciated 0.5 percent to 32.3375 per dollar by the close in Moscow after an 0.8 percent gain last month. The country’s 54 billion rubles ($1.7 billion) of local debt due March 2018 fell, increasing the yield by 13 basis points, or 0.13 percentage point, to 7.93 percent.
Brent crude rose to $106.15 per barrel, after dropping 1.2 percent yesterday. The U.S. Federal Reserve will forgo announcing a third round of asset purchases after a two-day meeting ends today, according to 88 percent of economists in a Bloomberg News survey. Russian companies pay taxes in the second half of every month. Exporters convert revenue from abroad into rubles to pay the government, supporting the local currency.
“Oil’s two bucks lower, the tax period is over and according to the Fed quantitative easing is not wanted now,” Sergey Fishgoyt, deputy head of foreign exchange at Otkritie Financial Corp. in Moscow, said by e-mail. “As for the EU, things are scary. So it’s time to close longs in the ruble.”
Bundesbank President Jens Weidmann said the European Central Bank shouldn’t exceed its mandate in a June 29 interview published today, a sign Germany may not approve further support for countries affected by the region’s debt crisis.
The ruble dropped 0.5 percent to 39.7925 per euro and 35.6923 against the central bank’s target dollar-euro basket. Investors increased bets on the currency weakening, with non-deliverable forwards showing the ruble at 32.8054 per dollar in three months, compared with expectations of 32.715 per dollar yesterday.
Russian government bonds worth 150 billion rubles matured today, according to data compiled by Bloomberg. The Finance Ministry sold 9.3 billion rubles of 10-year notes.